Here's What Warren Buffett Has Been Buying and Selling

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At The Motley Fool, we understand that it often pays to zig when Wall Street zags, but that doesn't mean we don't pay attention to what leading fund managers are buying and selling. And funds that aren't always in lockstep with the broader market can be a particularly valuable source of insight.

Every quarter, fund managers overseeing more than $100 million must disclose their quarter-end holdings publicly by filing Securities and Exchange Commission Form 13-F. The form lists all U.S.-traded securities the manager held at the end of the quarter. Although the form doesn't disclose the manager's short positions or intra-quarter trades, it can shine a bright light on his or her "long" stock bets.

The big picture
Warren Buffett is a familiar name to anyone who follows the investment world, with his Berkshire Hathaway (NYSE: BRK-B  ) company increasing its per-share book value by an annual average of 20% between 1965 and 2010, leaving the S&P 500 in the dust with its 9%. Clearly, the guy has a knack for making smart investments. 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.

Berkshire Hathaway's stock portfolio totaled about $66 billion in value as of Dec. 31, up 12% over just last quarter. The company's biggest holdings range from familiar longtime positions such as Coca-Cola and Wells Fargo to newer names, including IBM (NYSE: IBM  ) and DIRECTV.

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, 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.

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

A new holding is dialysis service provider DaVita (NYSE: DVA  ) , representing less than half a percentage of the portfolio. Many health-care stocks are compelling long-term investments, due to our growing and aging population. This is likely a Weschler buy. It generates a lot of cash flow, but it has also recently been accused of wasting medicines in order to collect more money from Medicare. That news set the stock back, presenting a buying opportunity for those with faith in the company.

Berkshire's stakes in IBM and Intel increased by 11% and 23%, respectively, though the IBM position is far larger, at $11.8 billion, versus less than $300 million for Intel. Still, it's big news to see such technology companies in the portfolio at all, as Buffett has long avoided them, explaining that it's hard for him to know how they will be doing in 10 years. But he highlighted IBM's five-year plan as an outstanding roadmap for him as an investor.

Berkshire sold out of its position in ExxonMobil (NYSE: XOM  ) entirely over the quarter. The stock's valuation may have played a part, as the price surged 17% during the quarter, but its departure is more likely tied to some of the issues it faces, such as a slowdown in production, falling prices for natural gas, and its operations in not-so-stable Iraq and tension-ridden Russia.

The number of Johnson & Johnson (NYSE: JNJ  ) shares held shrank by 22% during the quarter. Long revered and admired as a giant in consumer products, pharmaceuticals, and medical devices, J&J has seen its reputation tarnished somewhat lately, on news of various mishaps and questionable decisions such as selling artificial hips overseas that were not approved by the FDA. Berkshire's stake in the company is still sizable, though, at roughly $2 billion.

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

Looking for promising investments? Check out our free special report -- "The Stocks Only the Smartest Investors Are Buying" -- and learn which stocks are appealing to Warren Buffett and other great investors.

Longtime Motley Fool contributor Selena Maranjian, whom you can follow on Twitter @SelenaMaranjian, owns shares of Berkshire Hathaway, Coca-Cola, Johnson & Johnson, and Intel, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Berkshire Hathaway, International Business Machines, Intel, Wells Fargo, Coca-Cola, and Johnson & Johnson. The Fool owns shares of and has created a covered strangle position on Wells Fargo. Motley Fool newsletter services have recommended buying shares of Intel, Berkshire Hathaway, Johnson & Johnson, and Coca-Cola. Motley Fool newsletter services have recommended creating a diagonal call position in Johnson & Johnson. 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 (1) | Recommend This Article (16)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 17, 2012, at 6:49 AM, steveat wrote:

    intel is actually a good move due to right timing.

    First of all..I am not a "numbers" person. I am more of a "vision" person and this is how I see it.

    A few years back, Apply switched to Intel processors, which I, personally was not happy with as I still believe RISC architecture is better, but that is a debate for another day. Apply is showing STRONG sales in the consumer market even though we are in "tough" times.

    Then you have the emergence of "Cloud Computing" which has been quite disruptive and only a small % have jumped on board, which means that the growth in that market is only going to get MUCH larger. You always should (best practices) build your cloud with NEW equipment then add legacy gear on afterwards. The number of public clouds worldwide jumped from 400 in 2010 to close to 900 now. They are using IaaS solutions from VMWARE, Citrix, CISCO, ONAPP..not to mention hosted solutions like AMAZON AWS and JOYENT whom are growing at a quick pace, thus requiring more "INTEL" grade products.

    Emerging markets are still growing with more and more PC's being purchased and we can't only theorize on the ceiling for that.

    There's quite a bit to be looking forward to as Intel moves ahead.

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