Warren Buffett announces his love for Heinz
On Valentine's day this year, Berkshire Hathaway announcedthat in partnership with 3G Capital, it would acquire beloved American condiments and food company Heinz for $28 billion. Buffett has often remarked about his elephant gun and his desire to acquire companies, and certainly the move to take over Heinz (while allowing Heinz to keep its own distinct identity) fit the bill.
Of the transaction, Buffett noted: "Heinz has strong, sustainable growth potential based on high quality standards, continuous innovation, and excellent management and great tasting products... we are very pleased to be a part of this partnership."
In total, the cost of the investment in Heinz to Berkshirewas $12.25 billion. And while Berkshire didn't disclose what the potential total impact to its bottom line and stock holders could be, Buffett noted when discussing the deal with CNBC in May:
Well, we always prefer to buy businesses, and that's what we consider Heinz to be. Well, we'll -- we'll be in Heinz forever and -- if a few of our partners decide to sell out at some point, I hope they sell to us.
When you consider that part of the investment included $8 billion in preferred shares that pay a 9% dividend, Buffett is likely pleased with the investment already, and when he said simply about the partnership with Jorge Paulo Lemann of 3G in his annual letter to shareholders, "we couldn't be in better company," it's easy to think this will be a deal that continues to pay off down the road.
Most recently, Berkshire Hathaway disclosed a nearly $3.5 billion position in ExxonMobil (NYSE:XOM), which makes the energy giant now the 7th largest position in the Berkshire Hathaway portfolio:
In addition to the purchase of Exxon, Berkshire Hathaway also unloaded a big chunk of its holdings in ConocoPhillips, which it originally purchased in 2008. But it wasn't just those two energy companies that piqued Buffett's interest, as there was also the more than $500 million position of Suncor Energy (NYSE:SU) added in the second quarter.
However, it isn't just the energy sector Buffett and Berkshire Hathaway have taken an interest in; there was also the $625 million addition of Liberty Media Corp and $400 million investment in Chicago Bridge & Iron Company, plus the nearly $700 million additional position taken in Wells Fargo (NYSE:WFC) -- all in the first quarter.
The Berkshire Hathaway stock holdings had a market value of $75.3 billion at the end of 2012, but thanks to the additional purchases, plus the growth in the market itself, the Berkshire Hathaway portfolio is now worth an astounding $92 billion.
The successor question still lingers... but perhaps less so
Berkshire Hathaway has continued its astounding performance in 2013, as it has delivered roughly $14.5 billion to its shareholders through the first nine months of 2013, up more than 40% when compared to the same time last year. Yet while there is no doubt that Buffett and his company are again in the position of market leadership, there has been no further clarity as to who will succeed Buffett when his tenure at Berkshire comes to an end.
While a specific person has not been announced, at the annual shareholder meeting in May, Buffett noted, "[t]he key is preserving a culture and having a successor, a CEO that will have more brains, more energy, more passion for it than even I have," and that he and the Berkshire board of directors are "solidly in agreement as to who that individual should be."
So while the broader public may not have insight into who that person is, there should be a bit of relief knowing the individual has been named, and there is a consensus between Buffett and the Berkshire board about that person's ability to lead the company after Buffett's departure.
While we don't know what the future holds for Berkshire Hathaway, we do know that 2013 was another great year for Buffett, and all things point to that continuing in 2014.
Fool contributor Patrick Morris owns shares of Berkshire Hathaway and ExxonMobil. The Motley Fool recommends Berkshire Hathaway and Wells Fargo. The Motley Fool owns shares of Berkshire Hathaway, Liberty Media, and Wells Fargo. 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.