Here's What Warren Buffett Has Been Buying and Selling

Every quarter, many money managers have to disclose what they've bought and sold, via "13F" filings. Their latest moves can shine a bright light on smart stock picks.

Today, let's look at investing giant Warren Buffett. His Berkshire Hathaway (NYSE: BRK-B  ) company has increased its per-share book value by an annual average of 20% between 1965 and 2011, leaving the S&P 500 in the dust with its 9%. Clearly, the guy knows a thing or two about investing. With that in mind, let's take a look at his company's recent investment activity, noting that he heads a large corporation, and not a hedge fund or mutual fund. While he owns many businesses in their entirety, from Dairy Queen to GEICO to Fruit of the Loom, he also has tens of billions of dollars invested in the stock of other companies.

The company's reportable stock portfolio totaled $75.3 billion in value as of September 30, 2012.

Before we delve into changes in the portfolio, it's important to note that the collection of stocks and its management is not handled entirely by Mr. Buffett. For many years, Lou Simpson managed the investments of Berkshire subsidiary GEICO, and now, there are two newcomers in the fold co-managing some Berkshire money, one or both of whom may end up succeeding Buffett at the company's investment helm. They're Todd Combs and Ted Weschler, and some of Berkshire's investment moves reflect their thinking. Each was managing about $2.75 billion of Berkshire's money not so long ago, but that has been hiked to around $4 billion apiece, suggesting that Buffett is pleased with them. So don't assume that any particular purchase or sale is purely a Buffett decision.

Interesting developments
So what does Berkshire Hathaway's latest quarterly 13F filing tell us? Here are a few interesting details:

New holdings include forestry and agricultural equipment giant Deere (NYSE: DE  ) , which has been growing its revenue and earnings at an accelerating pace over the past few years. In its most recent quarter, earnings per share advanced by 23%. Boding well for the company is its heavy exposure to global economies, including many fast-growing emerging markets. The company's strategy is to profit from macro trends such as growing global population and income, as well as global infrastructure work.

Among holdings in which Berkshire Hathaway increased its stake were National Oilwell Varco (NYSE: NOV  ) and DaVita Healthcare Partners (NYSE: DVA  ) . National Oilwell Varco is the biggest U.S. maker of oilfield equipment, with my colleague Aimee Duffy pointing out that, "Ninety percent of the world's rigs have National Oilwell Varco equipment on them..." Its last quarter featured more double-digit growth. Some would like to see its profit margins grow more.

DaVita is a top dialysis company, experiencing solid revenue growth, and even faster earnings growth. The company is expanding internationally and, though this is costing it in the near term, the investments are likely to pay off well in the future. Ted Weschler has been a longtime investor in the company.

Berkshire Hathaway reduced its stake in Mondelez International (Nasdaq: MDLZ  ) , spun off from Kraft (Nasdaq: KRFT  ) , to focus on the international arena. Bulls like the fact that it can grow faster than its North American counterpart, as many foreign economies are developing, and more dynamically than the established first world. Analysts at Cannacord Genuity recently slapped a "sell" rating on the company, while favoring Kraft. That had our own analysts scratching their heads, thinking it must be due to Mondelez's debt.

Finally, Berkshire Hathaway unloaded several companies, such as Dollar General (NYSE: DG  ) . Dollar General's stock performed much better than most during our recent recession, with financially-strapped and worried consumers flocking to its low prices. As our economy recovers, though, the company may be less appealing to many. With its stock having run up a bit, too, it's also less of a bargain at the moment.

We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. Therefore, 13-F forms can be great places to find intriguing candidates for our portfolios.

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  • Report this Comment On November 15, 2012, at 8:08 PM, panda72 wrote:

    No mention of the fact Warren dumped almost all of his GE and Johnson & Johnson?

    I think I understand the J&J move given their patent situation and narrowed moat but the GE move has me scratching my head.

    DISC: no position in GE or JNJ

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