Berkshire boosts biggest bets and more

Warren Buffett adds to his 'big four' as his company takes new stakes in CB&I and Liberty Media.

By TheStreet Staff May 16, 2013 12:00PM

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Financial Stock Chart © Kick Images Photodisc Getty ImagesBy Antoine Gara


Warren Buffett-run Berkshire Hathaway (BRK.A) boosted some of its biggest investments in the first quarter of 2013 while taking new positions in Chicago Bridge & Iron (CBI) and Liberty Media (LMCA).


Berkshire's biggest trades in 2013 appear to reflect an increasing diversity in the investment conglomerate's portfolio as Buffett adds to his 'big four' stock holdings and lieutenants Todd Combs and Ted Weschler take on larger discretionary investments.


In the first quarter, Berkshire increased its stake in Wells Fargo (WFC) by 4.2% to a total holding of over 458 million shares worth about $18 billion as of the close of Wednesday trading.


Berkshire also bought 6.5 million IBM (IBM) shares, increasing its leading stake in the tech services giant to about $14 billion as of Wednesday's close. The company also added to long-time positions such as Wal-Mart (WMT) and DirecTV (DTV).


DirecTV, thought to be an investment by Combs and Weschler, is now among Berkshire's top stock holdings.


Buffett's so called 'big four' investments include Wells Fargo, Coca-Cola (KO), IBM and American Express (AXP).


Berkshire also added new positions in the first quarter, including a stake in industrial giant Chicago Bridge & Iron and a new position in Liberty Media.


Both CB&I and Liberty Media are in the midst of consolidation efforts. In 2012, CB&I cut a $3 billion deal to buy energy specialist Shaw Group (see TheStreet), while Liberty Media recently cut a deal to buy Virgin Media (see TheStreet), in an expansion in the U.K.


Berkshire's Liberty Media $600 million-plus stake represents about 5% of the company's outstanding shares and is likely the brainchild of Weschler or Combs. The $400-million plus position in CB&I represents about 6% of the company's outstanding shares.


It's no surprise Berkshire boosted its bets on large financial sector holdings like Wells Fargo and US Bancorp (USB). At Berkshire Hathaway's annual meeting earlier in May, Buffett gave a clean bill of health to the U.S. banking system.


"I consider the banking system in the United States to be stronger than at any time in the last 25 years," Buffett said at the shareholder meeting in Omaha, Nebraska.


Meanwhile, new positions such as Liberty Media and a rising stake in DirecTV indicate the growing presence of Combs and Weschler. While Buffett has yet to say who will succeed him in running Berkshire Hathaway, he has given unequivocal support to Combs and Weschler in managing the firm's $100 billion stock portfolio.


"We hit the jackpot with these two," Buffett wrote of Combs and Weschler, in Berkshire's 2012 shareholder letter. "In 2012 each outperformed the S&P 500 by double-digit margins. They left me in the dust as well."


"Consequently, we have increased the funds managed by each to almost $5 billion (some of this emanating from the pension funds of our subsidiaries). Todd and Ted are young and will be around to manage Berkshire's massive portfolio long after Charlie and I have left the scene."


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