Warren Buffett Blog

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Aug 302010
 

This blog is being launched on the occasion of Warren Buffett’s 80th Birthday (August 30, 2010).  It will primarily provide analyses of Berkshire Hathaway’s investments, news releases, and statements made by Warren Buffett.  The intent is to expand upon major news items relating to Warren Buffett and Berkshire Hathaway.  I hope that the material provided here will be useful to value investors and others who wish to learn from Warren Buffett.

I have been closely following Warren Buffett’s investment philosophy for 25 years and regularly incorporate this material in my finance classes at the University of Maryland (Robert H. Smith School of Business).  I have accompanied University of Maryland students on a trip to Omaha for a private Q&A session with Warren Buffett and regularly attend Berkshire Hathaway annual meetings. Detailed notes from the last five annual meetings as well as my recent media interviews relating to Mr. Buffett are available on my personal website:

 http://www.rhsmith.umd.edu/faculty/davidkass/bhreport.html

 Posted by at 1:39 pm
Aug 302010
 

Approximately one week ago Lou Simpson, 73, announced that he planned to retire from the Geico subsidiary of Berkshire Hathaway as of December 31, 2010.  He has been managing Geico’s investment portfolio for decades. After Berkshire Hathaway’s 1996 acquisition of Geico, Simpson’s investments have been incorporated with those of Warren Buffett in Berkshire Hathaway’s 13F quarterly filing with the SEC.  So which investments since 1996 are Simpson’s and which are Buffett’s?  According to an August 22, 2010 Chicago Tribune article on Simpson’s retirement, Warren Buffett is quoted: “People are always attributing to me what he is doing”…”If you see a purchase on a company in the $300-to $400-million range, odds are very good that’s Lou’s.  I’m going to want to buy at least $1 billion of whatever it is we buy. So Nike, those things are his, while Wells Fargo, Kraft, those will be mine”.

In the recent past many in the media have either attributed Simpson’s investments to Buffett, or have stated that it was not possible to distinguish between the two.  Both of these statements are incorrect.  For example, if the latest 13F filing for Berkshire Hathaway covering its portfolio as of June 30, 2010 (and released on August 16) is examined, and the code “10” (Geico) appears alongside an investment, one may conclude that it was selected by Simpson.  Those investments without the code “10”, were selected by Buffett.

http://www.sec.gov/Archives/edgar/data/1067983/000095012310078001/v56978ae13fvhr.txt

From this document, Lou Simpson’s investments, as of June 30, 2010, are:

1. Bank of America ($72 million)
2. Becton, Dickinson ($128 million)
3. Carmax ($154 million)
4. Comcast ($197 million)
5. Fiserv ($201 million)
6. Home Depot ($77 million)
7. Ingersoll- Rand ($172 million)
8. Iron Mountain ($180 million)
9. Lowes Companies ($133 million)
10. NRG Energy ($127 million)
11. Nalco Holding ($187 million)
12. Nestle ($165 million)
13. Nike ($516 million)
14. Republic Services ($322 million)
15. Sanofi Aventis ADR ($15 million)

Warren Buffett’s investments are:

1. American Express ($6.0 billion)
2. Coca Cola ($10.0 billion)
3. ConocoPhillips ($1.4 billion)
4. ExxonMobil ($24 million)
5. Gannett ($23 million)
6. General Electric ($112 million)
7. GlaxoSmithKline ($51 million)
8. Johnson & Johnson ($2.4 billion)
9. Kraft Foods ($2.9 billion)
10. M&T Bank ($455 million)
11. Moody’s ($613 million)
12. Procter & Gamble ($4.7 billion)
13. Torchmark ($140 million)
14. US Bancorp ($1.5 billion)
15. USG Corp.($206 million)
16. Wal-Mart ($1.9 billion)
17. Washington Post ($709 million)
18. Wells Fargo ($8.2 billion)
19. Wesco Financial ($1.8 billion)

As can be seen from above, Warren Buffett’s investments, on average, are much larger in value than are those of Lou Simpson.  Also, the value of those investments attributed to Simpson include Geico’s investments in those companies as well as investments from other Berkshire Hathaway subsidiaries.

It should be noted that the investments listed above from Berkshire’s latest 13F filing, represent its holdings of U.S. based companies.  From Berkshire Hathaway’s 2009 Annual Report, additional holdings of foreign companies (as of December 31, 2009) include BYD ($2.0 billion), POSCO ($2.1 billion), Sanofi-Aventis ($2.0 billion), and Tesco plc ($1.6 billion).  These investments can be attributed to Warren Buffett.  (In the Chicago Tribune article cited above, Warren Buffett mentioned that both he and Lou Simpson both began buying Tesco at the same time.)

 Posted by at 12:41 pm