Warren Buffett's Berkshire Hathaway holdings have undergone some major changes in the third quarter, according to the company's latest 13F filing.
Not only did Buffett and Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) sell more than $750 million in two American giants, they initiated four new holdings and eliminated three positions entirely. Overall, Berkshire's reported portfolio, which only includes long positions, increased to $75.3 billion for the quarter ended Sept. 30, up from $74.3 billion the previous quarter.
While some think Buffett is taking profits where he can, others think he is building up a stockpile of cash for a major move.
"Buffett may be selling the consumer stocks to provide more funds to his deputies while reserving money for a large acquisition," David Kass, a professor at the University of Maryland's Robert H. Smith School of Business, told Bloomberg News.
"He may be really wanting to keep that aside for his big elephant," said Kass, who is referring to Buffett's quote in a letter to shareholders last year where the 82-year-old investing legend stated, "Our elephant gun has been reloaded, and my trigger finger is itchy."
Only Buffett and Berkshire's new portfolio managers, Todd Combs and Ted Weschler, truly know why they made their latest moves, and so without further speculation, here they are.
Warren Buffett's Latest Sales
- General Electric (NYSE: GE) and Johnson & Johnson (NYSE: JNJ) each had their positions dramatically reduced in the last quarter. Berkshire held around 492,000 shares of JNJ as of Sep 30, down from 10.3 million shares three months ago. The market value of the remaining JNJ stock is just $34 million, down $682 million from a quarter ago. Buffett now owns 88,900 GE shares, an 88% decrease from the over 5 million shares three months earlier, andthat stake is now worth just under $12 million, down $88.4 million.
- CVS Caremark Corp. (NYSE: CVS), Dollar General Corp. (NYSE: DG), and Ingersoll-Rand PLC (NYSE: IR) all had their positions eliminated last quarter. All three were small holdings for Berkshire, combining for less than 1% of the overall portfolio value, at just under $400 million.
- Procter & Gamble (NYSE: PG) currently makes up 4.86% of the overall portfolio and more than 10% of its shares were sold last quarter. Interestingly, PG's value in the portfolio grew as PG stock rose from $61 to $69 from the end of June to the end of September.
- Verisk Analytics Inc. (Nasdaq: VRSK) is a provider of information about risk to professionals in insurance, healthcare, mortgage, government, supply chain, and risk management. Berkshire sold more than 300,000 shares of VRSK stock last quarter.
- United Parcel Service Inc. (NYSE: UPS) and Lee Enterprises Inc. (NYSE: LEE) saw their positions decrease last quarter by 77% and 65%, respectively.
- U.S. Bancorp (NYSE: USB), which makes up 2.79% of Berkshire's portfolio, had its holdings cut by 10% and Visa Inc. (NYSE: V), which makes up a small 0.28% of the portfolio, saw its shares reduced by 25%.
The New Berkshire Hathaway Holdings
- Deere & Co. (NYSE: DE), a.k.a. John Deere, was the largest of four positions Berkshire initiated last quarter. Around 4 million shares were purchased, currently worth $340 million.
- Media General Inc. (NYSE: MEG), Precision Castparts Corp. (NYSE: PCP), and Wabco Holdings Inc. (NYSE: WBC) were the other three new positions. All four were under $400 million in value, which means Buffett most likely was not responsible for the purchases, as he typically only handles moves over $1 billion.
- International Business Machines Corp (NYSE: IBM), which currently makes up 18.6% of Berkshire's portfolio, had its position increase 1.3% last quarter. Buffett initiated the stake in IBM during the third quarter of 2011and has added to the position every quarter since.
- General Motors Co. (NYSE: GM) saw its stake increase 50% with the addition of five million new shares. Berkshire may be trying to bring down its average purchase cost, as the company initiated its GM stake in the first quarter of 2012 when prices were on average higher than they were last quarter.
- National-Oilwell Varco Inc. (NYSE: NOV) was introduced to the Berkshire portfolio in the second quarter of this year and had its stake increase 47% last quarter. NOV stock currently holds a small 0.45% position in the portfolio.
- The Bank of New York Mellon Corp. (NYSE: BK) and Wells Fargo & Co. (NYSE: WFC) are two financials that Buffett added to last quarter. The position in Wells, which is the second largest behind The Coca-Cola Co. (NYSE: KO), grew almost 3% while Berkshire's holding in BK stock increased by almost 5%.
One final note: Anyone who looks at the actual filing will see that the Berkshire Hathaway holdings in Coca-Cola doubled to 400 million shares, but that is due to the two-for-one stock split that occurred last quarter.
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