Buffett Buyout and Bank Buy

Last week, the real-money Inflation-Protected Income Growth portfolio lost a little more than $150 of its market value from the prior week's update, dropping to $34,347.29. That drop of slightly less than 0.5% in a week is well within normal market variation -- for instance, the S&P 500 dropped more than 1.4% on Friday alone. Still, that overall small movement in the portfolio's worth hides what was actually a surprisingly active week.

What happened?
The biggest news of the week for the iPIG portfolio came from none other than Warren Buffett. Buffett's Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  )  announced on Tuesday that it was going to buy out Nevada electric generator and iPIG pick NV Energy (NYSE: NVE  ) for $5.6 billion. Both because it'll be a cash buyout and because Berkshire Hathaway does not currently pay dividends, the iPIG portfolio will have to part ways with NV Energy, either at the acquisition or before.

That said, the week did turn into something of a mutual admiration society, as the iPIG portfolio returned the favor on Thursday, picking up shares in banking giant Wells Fargo (NYSE: WFC  ) . Buffett has also been recently buying Wells Fargo shares. Aside from Buffett's stamp of approval, what made Wells Fargo attractive to the iPIG portfolio was the fact that the Federal Reserve has been allowing its dividend to rise faster than that of most other major banks. Strength like that is worth noting and appreciating.

Yet in spite of all that commotion, it's also important to acknowledge the primary tactic of the iPIG portfolio:collecting dividends from companies that pay and regularly increase them. And on that front, iPIG selection United Parcel Service (NYSE: UPS  ) continued its streak of dividend payments that stretches back pretty much to its IPO. For the second consecutive quarter, UPS paid the iPIG portfolio $0.62 per share, a payment that it increased shortly after being chosen for the portfolio.

What comes next?
Aside from the money currently allocated to the stock that might get away, the iPIG portfolio is fully invested at this time. The portfolio needs to figure out a replacement holding for the money currently sitting in NV Energy due to the pending Berkshire Hathaway takeover. Beyond that, it's largely a matter of collecting the dividends, reviewing the holdings, and pruning and replacing the stocks of companies that no longer look like they fit.

iPIG Portfolio snapshot as of May 31, 2013

Company

Purchase Date

No. of Shares

Total Investment (including commissions)

Current Value

United Technologies

12/10/2012

18

$1,464.82

$1,708.20

Teva Pharmaceutical

12/12/2012

38

$1,519.40

$1,451.60

J.M. Smucker

12/13/2012

17

$1,483.45

$1,716.32

Genuine Parts

12/21/2012

23

$1,476.47

$1,788.02

Mine Safety Appliances

12/21/2012

36

$1,504.96

$1,797.12

Microsoft

12/26/2012

55

$1,499.15

$1,919.50

Hasbro

12/28/2012

43

$1,520.60

$1,912.64

NV Energy

12/31/2012

84

$1,504.72

$1,968.96

United Parcel Service

1/2/2013

20

$1,524.00

$1,718.00

Walgreen

1/4/2013

40

$1,501.80

$1,910.40

Texas Instruments

1/7/2013

47

$1,515.70

$1,687.77

Union Pacific

1/22/2013

6

$805.42

$927.72

CSX

1/22/2013

34

$712.50

$857.14

McDonald's

1/24/2013

16

$1,499.64

$1,545.12

Becton, Dickinson

1/31/2013

18

$1,518.64

$1,775.16

Aflac

2/5/2013

27

$1,466.35

$1,503.63

Air Products & Chemicals

2/11/2013

17

$1,510.99

$1,604.97

Raytheon

2/22/2013

27

$1,473.91

$1,799.28

Emerson Electric

4/3/2013

28

$1,548.12

$1,608.88

Wells Fargo

5/30/2013

37

$1,525.48

$1,500.35

Cash

     

$1,646.51

Total Portfolio

     

$34,347.29

Data from the iPIG portfolio's brokerage account, as of May 31, 2013.

To follow the iPIG portfolio as buy and sell decisions are made, watch portfolio manager Chuck Saletta's article feed by clicking here. To join The Motley Fool's free discussion board dedicated to the iPIG portfolio, simply click here.

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