For a number of quarters, I've been posting a summary of Berkshire Hathaway's (BRka) 13F-HR changes.
It may also be useful to step back and see what the bigger changes have been to the Berkshire Hathaway portfolio over the past year.
(The 13F-HR is useful, but there's plenty of noise that comes from some of the smaller moves.)
So, especially since the portfolio is so concentrated, I've focused the following on changes to Berkshire's larger holdings from the end of the 1st quarter of 2011. This also will pick up substantial other investments in marketable securities that were made over the past year that are not in the 13F-HR.
(Something like Tesco PLC: TSCDY will not show up in the 13F-HR unless Berkshire buys the ADR.)
The changes to smaller positions (less than ~ $ 1 billion) are generally thought to be the work of the new investment managers (Ted Weschler or Todd Combs).
So here are the larger Berkshire positions that are are either new or were added to since the end of 1st Quarter 2011:
Price to Earnings (P/E)
IBM (IBM) 13.0x
Wells Fargo (WFC) 9.4x
Tesco PLC (TSCDY) 9.2x
Wal-Mart (WMT) 12.7x
Some things worth noting:
- IBM is an ~ $ 11 billion addition and by far the biggest change.
- The other larger additions were around $ 1 billion or less.
- IBM, Wells Fargo, and Wal-Mart are selling above Berkshire's cost basis.
- Tesco PLC is selling below Berkshire's cost basis.
- IBM and Wells make up 1/3 of equity portfolio.
- Buffett also added ~ 4% to Berkshire's sizable position in Munich Re since the end of 2010, but it's not clear if that happened in the 1st quarter of 2011 or more recently.
- There was also the $ 5 billion investment in Bank of America preferred shares.
Here are the larger positions sold since the end of 1st quarter of 2011 and their P/Es.
Price to Earnings (P/E)
Kraft (KFT) 15.3x
Procter & Gamble (PG) 16.4x
Johnson & Johnson (JNJ) 12.4x
It's also worth noting that even after all of these sales, each of these stocks remain relatively large positions within the equity portfolio. Procter & Gamble actually remains in the top five.
1. Coca-Cola (KO)
2. IBM (IBM)
3. Wells Fargo (WFC)
4. American Express (AXP)
5. Procter and Gamble (PG)
Coca-Cola, IBM, Wells Fargo together make up more than 1/2 of the equity portfolio.
Each position is ~4-5x larger than the entire investment portfolios of Weschler and Combs.
Adam
Other than IBM, established long positions in all stocks mentioned. TSCDY is, and if not sold likely will remain, a very small position.
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Applying Newton's Fourth Law
Origin of Newton's 4th Law?
"Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, 'I can calculate the movement of the stars, but not the madness of men.' If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases." - Warren Buffett
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Notable Quote
"Warren and I have not made our way in life by making successful macroeconomic predictions and betting on our conclusions.
Our system is to swim as competently as we can and sometimes the tide will be with us and sometimes it will be against us. But by and large we don't much bother with trying to predict the tides because we plan to play the game for a long time.
I recommend to all of you exactly the same attitude.
It's kind of a snare and a delusion to outguess macroeconomic cycles... ...very few people do it successfully and some of them do it by accident. When the game is that tough, why not adopt the other system of swimming as competently as you can and figuring that over a long life you'll have your share of good tides and bad tides?" - Charlie Munger
Our system is to swim as competently as we can and sometimes the tide will be with us and sometimes it will be against us. But by and large we don't much bother with trying to predict the tides because we plan to play the game for a long time.
I recommend to all of you exactly the same attitude.
It's kind of a snare and a delusion to outguess macroeconomic cycles... ...very few people do it successfully and some of them do it by accident. When the game is that tough, why not adopt the other system of swimming as competently as you can and figuring that over a long life you'll have your share of good tides and bad tides?" - Charlie Munger