In a Securities and Exchange Commission filing, Warren Buffett's insurance conglomerate Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) disclosed that it had bought $45 million worth, or 3.7 million shares, of ServiceMaster (NYSE:SVM).
Mathew Emmert made ServiceMaster -- a lawn care, maid service, and pest control company -- a selection for his Motley Fool Income Investor due to its rock-solid business, its strong corporate culture, its discount to intrinsic value, and its 3.5% dividend yield. Berkshire most likely bought ServiceMaster for the same reasons.
Berkshire also disclosed that it had purchased $138 million worth of Comcast (NASDAQ:CMCSA). As ServiceMaster and Comcast have market capitalizations of $3.5 billion and $63.2 billion, respectively, these transactions are small fractions of the total outstanding shares at each company.
The size of these transactions suggests that the person at Berkshire who made these purchases was not Buffett, but rather the equally astute investor Lou Simpson, who runs the investment portfolio at Berkshire subsidiary GEICO. Although a combined $180 million is a great deal of money, it isn't enough to move the needle in the Berkshire portfolio, which exceeds $80 billion, including uninvested cash.
Berkshire, like many investment companies, can request that investments like these be treated as secret for as much as a year -- the SEC will keep such filings confidential. Last week Berkshire disclosed that it had purchased 9% of Pier 1 Imports (NYSE:PIR) in its regular quarterly filing. Berkshire had shielded these new purchases at the time, but decided to file an amendment to its June 30 holdings disclosure, as it believed that confidential treatment of the holdings was no longer necessary. This means, most likely, that these purchases had still been ongoing through the filing, so in the next quarterly filing, it could be that Berkshire's positions in ServiceMaster and Comcast will be larger, even substantially larger.
But that's just conjecture: There are plenty of other reasons why an investment company would want to keep a purchase confidential for a period of time after its transactions are complete.
The purchase of ServiceMaster and Comcast, along with Pier 1, seems to fit into a pattern of Berkshire purchases of the last few years -- all seeming to focus on the home. With these new purchases, we have lawn care, air conditioning, and pest control at ServiceMaster, entertainment provided by Comcast, not to mention the assorted Pier 1 knickknacks and furnishings. Then there are the Berkshire subsidiaries that make Carpet (Shaw), brick (Acme Brick), paint (Benjamin Moore), insulation (Johns Manville), kitchen stuff (Pampered Chef), and so on. You can even just buy the home from Berkshire outright, through Clayton manufactured homes, or through HomeServices of America, one of the nation's largest residential real estate companies. It's owned by MidAmerican Energy, which is majority owned by Berkshire.
Now, if only Berkshire had a place -- a big place -- where one could buy all of the furniture for a house....
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Bill Mann owns shares in Berkshire Hathaway.
