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 company has increased its per-share book value by an annual average of 19.7% between 1965 and 2012, leaving the S&P 500 in the dust with its 9.4%. 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 $89 billion in value as of June 30.

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 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 has had the amount of money he manages for Buffett increased, suggesting that Buffett is pleased with them. The total has recently been about $5 billion apiece. Thus, we shouldn'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

The company's new holdings are Suncor Energy (NYSE: SU  ) and DISH Network (NASDAQ: DISH  ) . Canada's largest energy company, Suncor has been shifting its focus from low-priced natural gas to more profitable oil and is also investing significantly in renewable energies. It's vulnerable to possible tightened regulations on pipelines, and many like its diversification beyond North America. Suncor's last quarter featured operating earnings down because of some planned and unplanned production outages. Its stock yields 2.4%.

DISH Network is a relatively small new holding for Berkshire, and an intriguing one, as many see it and other pay-TV services threatened by the growth of streaming video services. In an interesting move, DISH recently inked a deal with Southwest Airlines to offer free TV on flights. The company had previously pursued some far bigger deals. The company's second quarter featured a net subscriber loss, leading some to speculate that it might end up strengthening itself by merging with another company.

Among holdings in which Berkshire Hathaway increased its stake were National Oilwell Varco (NYSE: NOV  ) and Chicago Bridge & Iron (NYSE: CBI  ) . National Oilwell Varco is dominant in oil and gas drilling and oilfield services equipment. It recently posted second-quarter earnings that featured revenue growing but earnings shrinking a bit. It also reported a record backlog for capital equipment orders of nearly $14 billion, up 24% over year-earlier levels. The company has gobbled up many smaller companies, which may pay off well, as they get fully integrated into the mothership. National Oilwell Varco recently doubled its dividend (yielding 1.4%) and seems an attractive buy to many.

Chicago Bridge and Iron offers construction and engineering services to the energy and natural resources sectors, working on projects related to the water, hydrocarbon, and nuclear industries. Its second quarter featured estimate-topping revenue, but it lowered its expected new orders for 2013 a bit, in part because of governmental delays. Its backlog is still hefty, topping $24 billion. The company bought Shaw Group last year, which is known for constructing nuclear-related buildings. Chicago Bridge & Iron's stock is up 63% over the past year and has averaged annual growth of nearly 24% over the past 15 years.

Berkshire Hathaway reduced its stake in lots of companies, including Kraft Foods (NASDAQ: KRFT  ) , Mondelez International, and Moody's. Mondelez was split up from the overall Kraft company last year. Kraft Foods now specializes in domestic groceries, including brands such as Jell-O, Oscar Mayer, and Planters, while Mondelez focuses on global snacks and beverages, including brands such as Oreo, Trident, Tang, and Cadbury. Kraft has been favoring profitability over revenue growth, and in its second quarter, earnings rose while revenue slid a bit. Kraft is challenged by competition from private labels. On the plus side, it does offer a 3.6% dividend yield.

Finally, Berkshire Hathaway closed out its position in USA Today publisher Gannett. It may seem an ironic move, since Buffett is a big fan of newspapers, long owning The Buffalo News and a chunk of The Washington Post and recently buying the Omaha World Herald, among other names. But Buffett himself has noted that the newspaper business is in a very tough position these days.

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, and 13F forms can be great places to find intriguing candidates for our portfolios.

There are, of course, some stocks that Buffett is simply too rich to buy in any meaningful way. Find out about one such promising opportunity in "The Stock Buffett Wishes He Could Buy." The free report details a sector of the economy Buffett's heavily invested in right now and exactly why he can't buy one attractive company in that sector. Click here to keep reading. 


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9/22/2014 4:01 PM
CBI $59.79 Down -1.44 -2.35%
Chicago Bridge & I… CAPS Rating: ****
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KRFT $56.69 Down -0.22 -0.39%
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