Here's How Warren Buffett Made $9.5 Billion in 3 Months

2013 finished with a bang for Warren Buffett thanks to big gains from ExxonMobil and Phillips 66, as the Berkshire Hathaway investments likely grew by nearly $9.5 billion over the final three months of the year.

Jan 5, 2014 at 1:31PM

Although we won't know until February what stocks Warren Buffett bought and sold in the fourth quarter, a quick analysis of his most recent investments shows that Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) probably had one of its best quarters ... ever.


Source: Flickr/401(K) 2013.

Although the acquisition of ExxonMobil (NYSE:XOM) was the big news in the fourth quarter, perhaps the biggest news was just how well Berkshire Hathaway did. Provided no stocks were added or sold in the Berkshire Hathaway portfolio, Buffett probably made almost $9.5 billion in the fourth quarter, and the portfolio had a return of more than 10.3%. It should be noted the S&P 500 also had a remarkable October to December, and it, too, was up 9.9%.

Only three of the 43 stocks Berkshire held finished in the red for the quarter, and the high-flying Media General (NYSE:MEG) led the pack, as its stock price grew by almost 60%:


Media General reported third-quarter earnings that exceeded analysts' expectations, and the stock continued its torrid 2013 run through the end of the year. The company's stock rose by more than 400% on the year, and Berkshire Hathaway has watched its investment grow from $20 million to probably just over $100 million year to date. Many have noted that the future of broadcast television is dead, but this is one company bucking that trend.

In total, 23 of Berkshire Hathaway's investments returned more than the S&P 500 during the fourth quarter, and on average those company's stock prices grew by more than 19%.

However, a lot of those companies were some of the smallest ones in the Berkshire Hathaway portfolio (the previous chart is sorted by largest holdings to smallest), and in fact just five companies contributed to 70% ($6.7 billion) of the $9.5 billion in growth that Berkshire saw in the third quarter:


Phillips 66 (NYSE:PSX) had a phenomenal October to December, as its stock was up by more than 33%, representing an unrealized gain of $524 million. In fact, despite Phillips 66 representing just 10% of Berkshire's holdings in IBM and Procter & Gamble, it returned a greater raw dollar amount than those two companies combined.

Unlike Media General, the earnings at Phillips 66 represented somewhat of a disappointment; however, the announcement of an increased dividend, and the continued boom in the American energy market, helped contribute to higher prices.

It's also worth adding here that 2013 closed with an announcement that Berkshire Hathaway would be buying a specialty flow improver unit of Phillips 66 to add into its portfolio. When the move was announced, Buffett said: "I have long been impressed by the strength of the Phillips 66 business portfolio. The flow improver business is a high-quality business with consistently strong financial performance, and it will fit well within Berkshire Hathaway." 

American Express also had a remarkable run to end the year, and while it, too, had a solid third-quarter earnings announcement, it benefited from the continued realization that the payments industry is an ever expanding one, and the biggest players could continue to see growth in business and profits.  


Source: Flickr/Minale Tattersfield.

The final company worth noting is the previously mentioned ExxonMobil, which Berkshire began adding the in the second quarter, but its position wasn't disclosed until November. Like Phillips 66, Exxon has benefited from increased attention surrounding the viability of the American energy markets, but also the reality that Buffett thinks highly of it also put it on many people's radars. Considering it continues to be the top of class in the burgeoning industry, it should come as no surprise its stock continues to climb.

In all, Berkshire Hathaway and Warren Buffett had a great run to end 2013, and while the book value growth of the company may fall short of the S&P 500 return, it nonetheless had an astounding year.

How Buffett did it
The reality is, Warren Buffett has made billions through his investing. Yet thankfully, he wants you to be able to invest like him. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.

Fool contributor Patrick Morris owns shares of Berkshire Hathaway and ExxonMobil. The Motley Fool recommends American Express, Berkshire Hathaway, and Procter & Gamble and owns shares of Berkshire Hathaway and IBM. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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