Please ensure Javascript is enabled for purposes of website accessibility

3 Stocks Warren Buffett Added To Last Quarter

By Todd Campbell - Feb 27, 2016 at 8:40PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Berkshire Hathaway bought more Wells Fargo, Deere & Co, and Liberty Global in the fourth quarter.

Billionaire investor Warren Buffett may not be one of your Facebook friends, but you can still know what stocks he's buying. Big-time investors such as Buffett submit a 13F report to the Securities and Exchange Commission every quarter, highlighting what stocks they're buying and selling. Last quarter, Buffett boosted his exposure to Wells Fargo (WFC -0.41%), Deere & Co. (DE -0.57%), and Liberty Global plc (LBTYA -0.55%). Let's take a closer look at why the Oracle of Omaha wants to own more of these companies and if they might be worth owning in your portfolio, too.

Bigger spreads, bigger profit
Wells Fargo has been a big holding for Warren Buffett's Berkshire Hathaway (BRK.B 0.42%) (BRK.A 0.55%) for years, and last quarter, Buffett increased his stake in the nation's biggest mortgage lender by 9.4 million shares.

Buffett now owns 479.7 million shares in Wells Fargo, and since he's the bank's biggest shareholder, it's pretty clear that he thinks Wells Fargo has plenty of opportunity ahead of it. The economy continues to grow, albeit tepidly, and with the Federal Reserve shifting to rising interest rates, spreads between borrowing and lending rates should widen, providing profit tailwinds.

Last quarter, total average loans grew 7% to $912.3 billion, and net income totaled $5.7 billion. Net income for the full year was $23 billion, in line with 2014, and rising short-term rates could help lift results in 2016. The bank cited higher short-term rates as one reason its net interest income jumped $131 million year over year in Q4.

Given that the bank enjoys solid loan demand, it boasts arguably best-in-show financials, and its shares yield about 3%, investors might want to join Warren Buffett by making Wells Fargo a core holding in their portfolios, too.

SOURCE: DEERE & CO.

Planting seeds for growth
Buffett also bought more shares in agricultural equipment maker Deere & Company.

Berkshire Hathaway added 5.8 million shares of Deere & Co., and it now owns 22.9 million shares in the company overall.

The 34% increase in Buffett's stake suggests confidence that worry over global economic growth in Asia and Europe will ease and that rebounding crude oil prices will correlate to a bounce back in grain prices that could support equipment demand.

Last quarter, Deere & Co.'s management reported that fiscal first-quarter sales fell 13% year over year, and that it forecast an additional 10% drop in 2016.

That's not very bullish, but it appears that Buffett is willing to play the long game and assume that this is about the worst it will get for Deere & Co. If so, it might not be a bad bet. Even with all the headwinds, Deere & Co.'s C-suite still thinks it will deliver earnings of $1.3 billion this year.

Global quad play
Following the purchase of 587,011 shares last quarter, Berkshire Hathaway's 12.5 million-share position makes it Liberty Global's third biggest shareholder.

Buffett has always been a fan of great management teams, and there may be no better media CEO than Liberty Global's John Malone. Malone has been busy transforming Liberty Global into the European leader in media services, and recent deals that expand it into mobile position it nicely to pitch quad-play (television, telephone, Internet, and mobile) services to subscribers.

Earlier this month, Liberty Global reported that it's partnering with Vodafone to create a joint venture in the Netherlands to offer quad-play services, and last year, Malone spent $1.3 billion acquiring Belgian mobile operator Base.

Because Liberty Global's subscribers provide it with mountainous free cash flow that's growing thanks to new services, Buffett may keep this position for the long haul and if so, then Liberty Global shares may be worth owning. 

 

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway and Wells Fargo. The Motley Fool is short Deere & Company and has the following options: short March 2016 $52 puts on 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Wells Fargo & Company Stock Quote
Wells Fargo & Company
WFC
$45.75 (-0.41%) $0.19
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$455,170.00 (0.55%) $2,472.75
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$302.82 (0.42%) $1.27
Deere & Company Stock Quote
Deere & Company
DE
$366.05 (-0.57%) $-2.11
Liberty Global plc Stock Quote
Liberty Global plc
LBTYA
$21.91 (-0.55%) $0.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.