Every quarter, many money managers have to disclose what they’ve bought and sold, via “13F” filings. Here at the Motley Fool Singapore, we’ve been touting that looking at what great investors are doing is akin to a top scoring classmate sharing with you his or her study tips. Their latest moves can shine a bright light on smart stock picks. So far, we’ve looked at Singapore investor Hugh Young, US investors Ken Fisher, and George Soros. Today, let’s look at investing giant Warren Buffett himself. His Berkshire Hathaway (NYSE: BRK-B) company has increased its per-share book value by an annual average…
Every quarter, many money managers have to disclose what they’ve bought and sold, via “13F” filings. Here at the Motley Fool Singapore, we’ve been touting that looking at what great investors are doing is akin to a top scoring classmate sharing with you his or her study tips. Their latest moves can shine a bright light on smart stock picks.
Today, let’s look at investing giant Warren Buffett himself.
His Berkshire Hathaway (NYSE: BRK-B) company has increased its per-share book value by an annual average of 19.7% between 1965 and 2012, leaving the S&P 500 in the dust with its 9.4%. Clearly, the guy knows a thing or two about investing. With that in mind, let’s take a look at his company’s recent investment activity, noting that he heads a large corporation, and not a hedge fund or mutual fund. While he owns many businesses in their entirety, from Dairy Queen to GEICO to Fruit of the Loom, he also has tens of billions of dollars invested in the stock of other companies.
The company’s reportable stock portfolio totaled $85 billion in value as of March 31, 2013.
Before we delve into changes in the portfolio, it’s important to note that the collection of stocks and its management is not handled entirely by Mr. Buffett. For many years Lou Simpson managed the investments of Berkshire subsidiary GEICO, and now there are two newcomers in the fold, co-managing some Berkshire money; one or both of them may end up succeeding Buffett at the company’s investment helm. They are Todd Combs and Ted Weschler, and some of Berkshire’s investment moves reflect their thinking. Each was managing about $2.75 billion of Berkshire’s money not so long ago, but that has been hiked to around $4 billion apiece, suggesting that Buffett is pleased with them. So don’t assume that any particular purchase or sale is purely a Buffett decision.
So what does Berkshire Hathaway’s latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Liberty Media (NASDAQ: LMCA), and Chicago Bridge & Iron (NYSE: CBI). Liberty Media boasts majority control of Sirius XM Radio, and recently hit a 52-week high, just before first-quarter results were released, featuring record revenue of nearly $900 million, along with double-digit gains in revenue and net income. The report also cited Sirius adding more than 450,000 new subscribers, for a total of 24.4 million. Liberty is also building an ownership position in Charter Communications.
Chicago Bridge & Iron, a construction, procurement, and engineering company specializing in energy-industry construction projects such as refinery units and storage tanks, has been boosting its revenue growth rate lately, and its latest earnings report featured a $1.9 billion gain in awards, growing its hefty backlog to $25.5 billion. The company bought Shaw Group last year, which is known for constructing nuclear-related buildings.
Among holdings in which Berkshire Hathaway increased its stake were National Oilwell Varco (NYSE: NOV) and VeriSign (NASDAQ: VRSN). National Oilwell Varco has been a strong performer, averaging stock growth of 19% annually over the past decade. But it hiccupped in its last report, posting a dip in revenue, and its stock took a hit. Still, there’s much to like about the company, such as its record backlog of nearly $13 billion, and its 60% market share as a supplier of rig equipment. Interestingly, analysts at Zacks downgraded the stock to Strong Sell, based on factors such as shrinking margins and growing competition.
VeriSign, meanwhile, focuses on Internet infrastructure, and is likely a choice of one of Buffett’s investing lieutenants. Its last earnings report topped expectations, with revenue growing 15% year over year, and earnings per share (EPS) by 38%. Its registry services added about 2 million net new domain names, ending the quarter with 123 million .com and .net names, up 5.5% over year-ago levels.
Berkshire Hathaway reduced its stake in Kraft Foods spin-off Mondelez International. There’s speculation that the company might merge with PepsiCo, but regardless, it’s positioned to profit from faster growth rates in developing economies. It’s not without risks, though, such as strength in private brands.
Finally, Berkshire Hathaway closed out its positions in General Dynamics and Archer-Daniels-Midland (NYSE: ADM). Archer-Daniels-Midland has been pressured by droughts, but it has remained a solid dividend payer and recently traded near a 52-week high. Its latest quarter featured revenue slightly up, but earnings down. The company is looking to expand in Asia via a purchase of GrainCorp, Australia’s leading agribusiness concern. (Dry weather has been putting pressure on GrainCorp’s grain production, as well.)
We should never blindly copy any investor’s moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. To continue to learn more about what other investors are doing, click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. This article was written by Selena Maranjian, and first published on fool.com