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 the leading money managers are buying and selling.
Every quarter, portfolio 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 intraquarter trades, it can shine a bright light on his or her long stock bets. To help us make use of 13-F data, we turned to Motley Fool partner AlphaClone, a research and investment-management firm that tracks hedge fund public disclosures and develops investment strategies based on them.
Q4 2010 update
Warren Buffett is the chairman and CEO of Berkshire Hathaway -- and, really, he needs no introduction. The total market value of Berkshire Hathaway's disclosed equity holdings as of Dec. 31, 2010 -- the latest quarter for which data is available -- was $52.6 billion across 25 holdings. Here's the sector breakdown, in pie-chart form:
Berkshire's 10 largest equity positions and associated changes in number of shares held as of Dec. 31 were:
(NYSE: KO)-- no change
(NYSE: WFC)-- increased 1.9%
(NYSE: AXP)-- no change
Procter & Gamble
(NYSE: PG)-- no change
(NYSE: KFT)-- no change
Johnson & Johnson
(NYSE: JNJ)-- no change
(NYSE: WMT)-- no change
- Wesco Financial -- no change
- Conoco Phillips -- no change
- 0. US Bancorp -- no change
During the quarter, Berkshire didn't buy or sell much of its existing holdings. Outside the top 10, Berkshire reduced its positions in Moody's and Bank of New York Mellon. The company did not fully liquidate any stock positions during the period.
According to AlphaClone's back-test simulation, anyone who invested in Berkshire Hathaway's 10 largest holdings at the time they were disclosed publicly each quarter would have returned 156.2% since 2000, versus 10.5% for the S&P 500 (including dividends) as of March 30. Here's a chart showing AlphaClone's back-test model:
The strategy above buys and sells its holdings each quarter, five trading days after the SEC's filing window for Form 13-F closes.
Selected Q4 2010 commentary
The consumer non-cyclical (40.7%), financial (37.4%), and services (7.6%) sectors make up most of the portfolio. Rounding things out are health care (5.4%), conglomerates (4.3%), and energy (3.8%). Here's where the portfolio is winning and losing currently:
- Current leader: Among the top 10, US Bancorp rose nearly 25% in the fourth quarter. The stock comprises 3.5% of the total Berkshire equity portfolio. US Bancorp provides financial services, including lending and depository services, cash management, foreign exchange services, and trust- and investment-management services.
- Current laggard: Johnson & Johnson was the worst performer in the top 10, gaining less than 1% in the fourth quarter. The stock is trading at a TTM price-to-earnings ratio of 12.4 and has a favorable four-star rating (out of five) in Motley Fool CAPS.
So there you have it -- the blow by blow of Berkshire Hathaway's fourth-quarter moves. Tell us what you think in the comments section below.
Company data provided by AlphaClone LLC, a San Francisco-based research and investment-management firm that tracks hedge fund public disclosures. For more information on the firm's investment approach, visit AlphaClone.
IMPORTANT DISCLOSURES FOR BACKTEST PERFORMANCE RESULTS
Backtesting is the process of evaluating a core strategy by applying it to historical data. Backtested performance results are provided for purposes of illustrating historical performance had a core strategy had been available during the relevant period. Backtested performance results are hypothetical and have inherent limitations. AlphaClone makes no representation that any core strategy will achieve performance similar to any backtested performance results. Actual results could differ materially from backtested performance and future results could differ materially from backtested performance. Past performance is no indication or guarantee of future results.
American Express, Berkshire Hathaway, Johnson & Johnson, Coca-Cola, and Wal-Mart areMotley Fool Inside Value picks. Berkshire Hathaway and Moody's are Motley Fool Stock Advisor selections. Wal-Mart is a Motley Fool Global Gains recommendation. Johnson & Johnson, Coca-Cola, Procter & Gamble, and Wal-Mart are Motley Fool Income Investor recommendations. Motley Fool Options has recommended a diagonal call positions on Johnson & Johnson and Wal-Mart. The Fool owns shares of Berkshire Hathaway, Coca-Cola, Johnson & Johnson, Moody's, Wal-Mart, and Wells Fargo. Motley Fool Alpha LLC owns shares of Johnson & Johnson. The Motley Fool has a disclosure policy.