The latest update from Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) about its stock holdings at the end of the third quarter was released last Thursday, and there were three companies that lost Berkshire Hathaway and Warren Buffett a combined $1.4 billion of value from the second quarter to the third.
In the second quarter, Berkshire Hathaway's 400 million shares of Coca-Cola were worth just north of $16 billion -- but at the end of the third quarter, that number had fallen down to $15.2 billion, for a total loss of $892 million, or about 5.5%.
Coca-Cola had a tough run since May, with the stock falling 11% from the middle of May to the end of September largely as result of weakening sales in emerging markets and lower margins thanks to a stronger dollar relative to other currencies. It must be noted, though, that since the end of September, the share price of Coca-Cola has risen by almost 5%.
Considering Buffett once said about Coca-Cola, "I'm the kind of guy who likes to bet on sure things. No business has ever failed with happy customers ... and you're selling happiness," and that he'd never sell a single one of his 400 million shares, I don't think he's too concerned about the quarterly movements of this great company.
The difficulties of IBM have been well documented, and the 3% fall in this tech giant over the quarter resulted in a $400 million loss to the $13 billion position Berkshire Hathaway held. This was compounded even further when IBM reported lackluster earnings in October as a result of weakened revenue from its China segment, which sent its stock plummeting by almost 6% on the day. It is has recovered slightly since the drop, but it still remains down 2.5% from the end of September until today.
IBM is down 45% relative to the market (a loss of 3% compared to a gain of 42% in the S&P 500) since he first disclosed his position in November 2011. Buffett originally said that one of the key reasons he invested in IBM was the road map the company laid out for its plan to 2015, and considering we've still got years to go until that is complete, you have to believe that Buffett is likely content waiting. When you also see Buffett has actually bought more shares since that time, he likely isn't swayed in his investment thesis on IBM.
Procter & Gamble (NYSE:PG)
Procter & Gamble remains the fourth largest position in the Berkshire Hathaway portfolio, but its 2% dip in price meant that Berkshire saw an unrealized loss of around $75 million. Although that is certainly a lot of money, when you consider that Buffett and Berkshire held a portfolio worth $89 billion at the end of the second quarter, the drop in price at P&G only represented a loss of less than one tenth of 1%. A core principal Buffett operates under is buy and hold -- so this minor movement is no cause for concern at all.