Buffett's recent portfolio moves

These are the top purchases of the Oracle of Omaha during the third quarter.

By GuruFocus.com Nov 23, 2012 9:35AM

Alamy Creativity AlamyBerkshire Hathaway (BRK.A) bought into four new stocks and sold three old ones. As pointed out by many, most of those positions are not Warren Buffett's, but are actually from his managers Ted Weschler and Todd Combs.

However, Buffett did buy more of his favorite companies, including Wells Fargo (WFC) and IBM (IBM), and sold Johnson & Johnson (JNJ) during the third quarter.

As of Sept. 30, Berkshire owns 38 stocks with a total value of $75.3 billion. These are the summary of the buys and sells for Berkshire's portfolio.

Here are the sector weightings of the portfolio:

Financials

35.8%

Consumer Goods

27.3%

Technology

18.6%

Consumer Services

9.5%

Oil & Gas

4%

Industrials

3.3%

Health Care

1.8%


Here are Buffett's top 5 holdings:

  1. Coca-Cola (KO) - 400,000,000 shares, 20.1% of the total portfolio.
  2. Wells Fargo - 422,549,545 shares, 19.4% of the total portfolio. Shares increased by 2.8%.
  3. International Business Machines - 67,517,896 shares, 18.6% of the total portfolio. Shares increased by 1.31%.
  4. American Express (AXP) - 151,610,700 shares, 11.4% of the total portfolio.
  5. Procter & Gamble (PG) - 52,793,078 shares, 4.9% of the total portfolio. Shares reduced by 11.42%.

 

Added: Wells Fargo

Warren Buffett increased his holdings in Wells Fargo by 2.8%. His purchase prices were between $32.85 and $36.1, with an estimated average price of $34.06. The impact to his portfolio due to this purchase was 0.53%. His holdings were 422,549,545 shares as of 09/30/2012.

 

Wells Fargo is a diversified financial services company providing banking, insurance, investments, mortgage and consumer finance services through stores, its Internet site and other distribution channels across North America as well as internationally. Wells Fargo has a market cap of $170.85 billion. Its shares were traded at around $31.6 with a price-to-earnings ratio of 10.2 and price-to-sales ratio of 2. The dividend yield of Wells Fargo stocks is 2.7%. Wells Fargo had an annual average earnings growth of 2.2% over the past 10 years.

 

Warren Buffett has kept buying Wells Fargo every quarter during the past years. His average cost per share is about $30, which is close to where it is traded now.

Added: IBM

Warren Buffett increased his holdings in International Business Machines by 1.31%. His purchase prices were between $183.09 and $207.31, with an estimated average price of $196.84. The impact to his portfolio due to this purchase was 0.24%. His holdings were 67,517,896 shares as of 09/30/2012.


IBM is an information technology company. The company operates in five segments: Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing. International Business Machines has a market cap of $216.72 billion. Its shares were traded at around $185.07 with a price-to-earnings ratio of 13 and price-to-sales ratio of 2. The dividend yield of International Business Machines Corp stocks is 1.8%. International Business Machines had an annual average earnings growth of 11.8% over the past 10 years. GuruFocus rated International Business Machines the business predictability rank of 4.5-star.

His average cost per share is about $173. Now the stock is traded about 7% above Buffett's cost.

Reduced: Johnson & Johnson

Warren Buffett reduced his holdings in Johnson & Johnson by 95.24%. His sale prices were between $67.21 and $69.55, with an estimated average price of $68.34. The impact to his portfolio due to this sale was -0.9%. Warren Buffett still held 492,028 shares as of 09/30/2012.


Johnson & Johnson is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. Johnson & Johnson has a market cap of $192.67 billion; its shares were traded at around $69.1 with a price-to-earnings ratio of 13.8 and price-to-sales ratio of 3. The dividend yield of Johnson & Johnson stocks is 3.5%. Johnson & Johnson had an annual average earnings growth of 7.2% over the past 10 years. GuruFocus rated Johnson & Johnson the business predictability rank of 2.5-star.

Warren Buffett keeps selling Johnson & Johnson, although he spoke favorably about the company before. At the peak in 2007, Buffett owned more than 61 million shares. Now Berkshire has only about half a million shares left.

What is going wrong with JNJ? GuruFocus warning signs do show that JNJ has shrinking profit margins; its asset growth is also faster than revenue growth. This is the historical gross margin of JNJ. It does shown steady decline, which is usually a sign of losing to competition. At the same time, JNJ is traded at close to 10-year, although the stock only appreciated 15% over the past 10 years.

Added: Davita
Berkshire increased its holdings in Davita by 9.65%. The purchase prices were between $94.8 and $103.61, with an estimated average price of $98.19. The impact to his portfolio due to this purchase was 0.12%. Holdings were 10,197,569 shares as of 09/30/2012.


DaVita is one of the largest providers of high-quality dialysis and related services for patients suffering from chronic kidney failure, also known as end stage renal disease. Davita Inc has a market cap of $10.64 billion; its shares were traded at around $112.32 with a price-to-earnings ratio of 18.7 and price-to-sales ratio of 1.5. Davita had an annual average earnings growth of 17.8% over the past 10 years. GuruFocus rated Davita Inc the business predictability rank of 3.5-star.

It is said that Davita is not a Buffett purchase, rather it is from his lieutenant Ted Weschler


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