Changes to Berkshire Hathaway’s Portfolio During the First Quarter of 2012

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May 232012
 

In its SEC 13F filing on May 15, 2012, Berkshire Hathaway revealed several significant changes to its equity portfolio that were made during the first quarter.  The largest addition was the purchase of 7.7 million shares of Wal-Mart with a current market value of $495 million.  This resulted in an increase of 20% in Berkshire’s stake in the company.  The second largest purchase was for 10.6 million shares of Wells Fargo, currently valued at $340 million, which increased Berkshire’s holdings by 3%.  The third largest purchase was for 3.3 million shares of DaVita, currently valued at $265 million.  This increased Berkshire’s stake in the company by 124%.   DaVita represented one of the largest holdings in the hedge fund, Peninsula Capital, that was managed by Ted Weschler prior to his joining Berkshire earlier this year.

Berkshire’s largest sales during the first quarter were 9.0 million shares of Kraft ($350 million, 10% of stake), 3.5 million shares of Procter & Gamble ($220 million, 5% of stake), and 3.8 million shares of Intel ($95 million, 33% of stake).

Berkshire also reported “confidential information has been omitted…and filed separately” with the SEC.  Most likely Warren Buffett is accumulating a large position in one or more companies.  Last year Berkshire received confidential treatment while it was accumulating $11 billion of IBM.

Two new purchases during the first quarter were 10 million shares of General Motors ($220 million) and 1.6 million shares of Viacom ($75 million).  Both of these purchases were most likely made by Berkshire’s new portfolio managers, Todd Combs, who joined Berkshire in early 2011, or Ted Weschler, because of their relatively small size.

I am quoted in a Bloomberg article (May 15) on Berkshire’s investments in General Motors and Viacom:

“There’s a pent-up demand for cars in this country, because of the financial crisis,” David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business, said in a phone interview. Buffett’s stock pickers “had an opportunity to buy at an attractive price, well below the initial public offering price,” he said.

Berkshire’s stake in Viacom, the owner of MTV and Paramount Pictures, recalls Weschler’s holding of Liberty Media Corp. when he was running hedge fund Peninsula Capital Advisors LLC, said the University of Maryland’s Kass. Viacom advanced 0.6 percent in New York trading.

The entire article is available at:

http://www.bloomberg.com/news/2012-05-15/berkshire-discloses-stake-in-gm-as-buffett-bets-on-stocks.html

 Posted by at 5:10 pm

Berkshire Hathaway Annual Meeting – May 5, 2012

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May 072012
 

At the Berkshire Hathaway annual meeting on May 5, 2012, there were 35,000 shareholders in attendance.  A total of 67 questions from shareholders and analysts were answered by Warren Buffett and Charlie Munger.  Approximately 1/3 of these questions came from the audience, 1/3 selected by three journalists (Andrew Ross Sorkin, Becky Quick, and Carol Loomis) from the hundreds of questions submitted by e-mail from shareholders, and 1/3 from three insurance industry analysts (Cliff Gallant, Jay Gelb, and Gary Ransom).  The question I submitted was selected by Andrew Ross Sorkin (He mentioned my name and that I was from Maryland (University of Maryland)):  “One of Berkshire’s largest investments is in Walmart.  Have you changed your opinion of this company as a result of the Mexican bribery scandal”?  Warren Buffett and Charlie Munger responded  that this “was a diversion of management time”…”Walmart’s earning power would not be materially affected”… and there was “nothing fundamentally dishonest about Walmart”.

I was also quoted in a Bloomberg article on Warren Buffett’s comments with respect to U.S. banks:

“The fact that he thinks U.S. banks are in fine shape would be consistent in arguing against further regulation,”said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business. “However, he has said that it’s not necessary to agree on all issues with everyone you have dealings with.”

The entire article is available at:

http://www.bloomberg.com/news/2012-05-07/buffett-says-u-s-banks-a-class-apart-from-europeans.html

 Posted by at 7:00 pm

Berkshire Hathaway’s Upcoming 2012 Annual Meeting – May 5

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May 022012
 

At the upcoming Berkshire Hathaway annual meeting on Saturday, May 5, approximately 40,000 shareholders are expected to attend.  Issues that are likely to be discussed at this meeting include:  Warren Buffett’s health (prostate cancer diagnosis), the valuation of Berkshire Hathaway stock, the performance of recently hired portfolio managers Todd Combs and Ted Weschler, and Berkshire’s large investment in IBM.

I was quoted in a Bloomberg article on this topic:

The stock currently trades at 120 percent of book value, in spitting distance of when Berkshire will consider buying back shares, a move that increases the per-share earnings of remaining shares. “For someone who purchases today, the company is saying it will step in and repurchase shares at just 10 percent below its current level,” notes David Kass, who teaches finance at the Robert Smith School of Business at the University of Maryland and closely follows Berkshire.

University of Maryland’s Kass also points out that Buffett has long known what to look for when it he goes shopping. “He bought companies with durable competitive advantages,” says Kass.“That doesn’t disappear overnight.”

The entire article is available at:

http://www.bloomberg.com/news/2012-05-02/buffett-s-biggest-bargain-may-be-berkshire-hathaway.html?cmpid=yhoo

 

 

 Posted by at 6:46 pm