Relax: Buffett Isn't Selling These Stocks

News outlets aplenty buzzed last night after Berkshire Hathaway (NYSE: BRK-B  ) released its 13-F filing, detailing what stocks Warren Buffett's company bought and sold during the last quarter.

Among the big news: Berkshire completely sold out of Bank of America (NYSE: BAC  ) , Becton Dickinson (NYSE: BDX  ) , Comcast (Nasdaq: CMCSA  ) , Fiserv (Nasdaq: FISV  ) , Lowe's (NYSE: LOW  ) , Nalco, Nestle, and Nike (NYSE: NKE  ) . All of 'em. Gone. Liquidated.

However, Buffett himself almost certainly wasn't selling these companies -- or buying them to begin with. All of these positions were relatively small, and whenever Berkshire owns a small position, it's usually the work of Buffett underling Lou Simpson, who ran GEICO's investment portfolio. Simpson retired at the end of last year, which explains why so many of his likely positions were recently liquidated.

Simpson's investments flew so low under the radar that Buffett appeared to forget about them himself. In 2009, he told Fortune that "We own stock in four banks: USB, Wells, M&T, and SunTrust." Asked later why he omitted Berkshire's 5-million-share stake in Bank of America, Buffett told CNBC that he had nothing to do with it. Simpson did. So there.

In 2004's annual letter to shareholders, Buffett said this about Simpson's investment moves:

You may be surprised to learn that Lou does not necessarily inform me about what he is doing. When Charlie and I assign responsibility, we truly hand over the baton -- and we give it to Lou just as we do to our operating managers. Therefore, I typically learn of Lou's transactions about ten days after the end of each month. Sometimes, it should be added, I silently disagree with his decisions. But he's usually right.

With Simpson now retired, there's now another Buffett underling to watch: Possible successor Todd Combs, who will start managing $2 billion to $3 billion of Berkshire's money in the near future. Get ready for more 13-F confusion.

Fool contributor Morgan Housel owns shares of Berkshire and Bank of American preferred. Becton, Berkshire Hathaway, and Lowe's Companies are Motley Fool Inside Value picks. Berkshire Hathaway and Nike are Motley Fool Stock Advisor recommendations. Motley Fool Options has recommended writing covered calls on Lowe's Companies. The Fool owns shares of Bank of America, Berkshire Hathaway, Fiserv, and Wells Fargo &. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (11) | Recommend This Article (34)

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  • Report this Comment On February 15, 2011, at 4:49 PM, midnightmoney wrote:

    Egads. Does this ring any bells? It's from a Motley Fool Stock Advisor Special Report from last year.

    "The company Buffett's been busy buying shares of is Becton, Dickinson [NYSE: BDX], or BD for short...

    "All of this is exactly why BD is the kind of "risky" investment you should feel comfortable making -- and should reward you handsomely, alongside Buffett, over the next 5 to 10 years.

    Turns out that he may not even know that he owned them to begin with. Ouch.

  • Report this Comment On February 15, 2011, at 8:19 PM, culverlake wrote:

    I actually bought BD on 8/2/10 at $69.54, it's up 15.7% at $80.44.....thank you MF and WB! It actually is the type of stock WB would buy -

    Profitability

    Profit Margin (ttm): 17.87%

    Operating Margin (ttm): 22.78%

    Management Effectiveness

    Return on Assets (ttm): 11.07%

    Return on Equity (ttm): 22.24%

    Not to bad and you get dividends as well.

  • Report this Comment On February 15, 2011, at 10:14 PM, rationalwalk wrote:

    For more information on Berkshire's 13F, take a look at this report:

    http://www.rationalwalk.com/?p=11182

  • Report this Comment On February 15, 2011, at 10:16 PM, longertime01 wrote:

    Bershire is a long term good value company to invest in. But nothing beats the feeling of investing it for yourself. KO is a good choice for now.

  • Report this Comment On February 16, 2011, at 10:44 AM, pondee619 wrote:

    What difference does it make who in Berkshire bought these stocks? If Berkshire is selling them now, isn't Buffet selling them now? If He isn't selling them, who is? Who is running Berkshire?

    "Buffett Isn't Selling These Stocks"

    "Berkshire completely sold out of ..., Becton Dickinson"

    "Buffett himself almost certainly wasn't selling these companies "??? THEN WHO IS?

    ""The company Buffett's been busy buying shares of is Becton, Dickinson [NYSE: BDX], or BD for short... " " is this correct?

    Did the fool hype BD because Buffet was buying it?

    So many questions; anyone taking odds I'll get answers?

  • Report this Comment On February 16, 2011, at 11:41 AM, brizzlekizzle wrote:

    I still go with his investment in silver, I think he was right on with that one. Do you think that during this dollar destruction phase it matters to your wealth what he is doing? I would be a little more trusting of him I if I didn't have a nasty habit of reading constantly, but I have my own thoughts now and I am way past obeying the oligarchy. However, I am waiting for his annual letter, I do like to read.

  • Report this Comment On February 16, 2011, at 1:46 PM, pondee619 wrote:

    Warren Buffett's Priceless Investment Advice

    By John Reeves

    October 1, 2009

    "It's clear that Buffett believes health care is an attractive sector. In the second quarter, he boosted Berkshire's stake in Johnson & Johnson and opened a position in Becton Dickinson (NYSE: BDX), a New Jersey-based company that manufactures medical supplies, devices, and diagnostic equipment.

    What's Next on Warren Buffett's Buy List?

    By Jim Royal

    December 15, 2009

    "Buffett has also initiated new stakes in ExxonMobil (NYSE: XOM), Republic Services (NYSE: RSG), a solid waste disposer, and Becton Dickinson (NYSE: BDX)."

    Becton possesses many of the familiar qualities that characterize a typical Buffett investment: tenured management, a strong balance sheet, and plenty of recurring free cash flow. And trading at just 14 times earnings, it certainly looks cheap at first blush – another hallmark of Buffett's buys."

    3 Stocks on Buffett's Wish List?

    By Ilan Moscovitz |

    April 30, 2010

    "... including Becton Dickinson (NYSE: BDX), which generates extraordinarily consistently returns on equity and has had its CEO in place for over a decade -- are already owned by Buffett."

    And now we find out that Buffet is not selling this stock, although Berkshire has sold all of its holdings therein, because Buffet might not have bought it?

    Are we reading these pages merely for entertainment or is there a shred of truth herein? These pages constantly exhort us to follow Buffet's lead in investing in large cap companies.

    "Buffett has also initiated new stakes in ..., and Becton Dickinson "

    "Buffett himself almost certainly wasn't selling these companies -- or buying them to begin with"

    Huh?

  • Report this Comment On February 17, 2011, at 7:18 AM, midnightmoney wrote:

    Pondee,

    I'd like an answer as well. Perhaps the author of this piece could be the one to do that? Mr. Housel, why the about face from the news letter to this current piece on the Buffettesque nature of becton dickson as an investment? Was it a lack of editorial communication or simply the result of the democratic structure at the fool, which states that "We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors."

  • Report this Comment On February 17, 2011, at 11:05 AM, pondee619 wrote:

    1. Buffet either bought BDX or he didn't. This would be fact, not opinion or editorial license. the question is, did he or didn't he?

    2. The premise of this "article" is that Berkshire selling out BDX is not Buffet selling BDX because he did not buy it. The question: What? It makes little difference how a stock got into Berkshire once the decisio to sell it is made.

    "Buffett himself almost certainly wasn't selling these companies " Then who is?

    "I'd like an answer as well. Perhaps the author of this piece could be the one to do that?" Still hasn't happened.

  • Report this Comment On February 25, 2011, at 2:00 PM, thidmark wrote:

    Don't think an answer is forthcoming.

    **morecrickets**

  • Report this Comment On February 25, 2011, at 2:10 PM, TMFHousel wrote:

    Sorry folks, hadn't bee keeping up on the comments.

    I stand by the analysis in this article. It's accurate. Confusion of what's purchased by Buffett/Simpson is incredibly common. When other other writers say Buffett owns XYZ that was probably a Lou Simpson pick, they're probably referring to Berkshire in general, and they're right. I'm simply making the distinction between Buffett and Simpson within Berkshire.

    Thanks,

    Morgan

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