Warren Buffet (Berkshire Hathaway) Stock Portfolio – Update 2009 Q2

Warren Buffet’s Berkshire Hathaway (BRK.A / BRK.B) stock updates for the second quarter of 2009 (End of 6/30/2009):

New Additions:

BDX [Becton Dickinson & Co.]

– 1,200,000 shares were purchased.  New Jersey based Becton, Dickinson & Co (BD) was incorporated in 1906, and is a medical technology manufacturer of medical supplies, devices, lab equipment, and diagnostic products.  The company operates under three segments/divisions which include BD Medical, BD Diagnostics, and BD Biosciences.  Its clients include healthcare institutions, life science researchers, clinical labs, industry, and the general public.  On the SEC filing the company was spelled as Beckton Dickson & Co.

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Added to:

JNJ [Johnson & Johnson]

– This quarter, Berkshire again added to the diversified healthcare/pharmaceutical  products manufacturer increasing its holdings by 13.55% to 36,914,633 shares up from 32,508,891 shares in Q1.

Last quarter (Q1), Berkshire added back about 3.9M shares bringing its Q1 total to 32,508,891 shares.  If we recall, in Q4 2008, Berkshire reduced its stake considerably, by 32,995,757 shares (bringing the 2008 Q4 total to 28,611,591 shares), down from 61,607,348 shares.  The move caused large media and analyst criticism.  “Hypocrite” and “selling America” made the headlines at a time when the market fell to its lows.  Buffett at the time of the Q1 results later, mentioned that the reduction was simply a move to increase and free up capital for other investment moves (considerable amount of bond & corporate debt purchases).

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Reduced:

CEG [Constellation Energy Group Inc.]

– Berkshire disposed of its remaining holdings of the energy company and no longer owns any shares.  If we recall, MidAmerican, a unit Berkshire Hathaway, agreed in September 2008 to pay $4.7B ($26.50/share) for Constellation Energy, which was close to bankruptcy. But the French power company EDF unveiled a plan to pay $4.5B for 50 percent of the company’s nuclear assets, and give MidAmerican the option to sell it up to $2B more of non-nuclear assets, in early December.

COP [Conoco Phillips]
– As Buffett has mentioned in his 2008 annual report and last quarter, Berkshire will continue to reduce its stake in the oil giant. The reduction leaves Berkshire with 64,485,759 shares, down from 71,228,096 shares in Q1.

ETN [Eaton Corp]
– The holdings of the industrial manufacturer of industrial parts and systems  was reduced by about 37.5% or 1,200,000 shares to 2,000,000 shares, down from 3,200,000 last quarter.

HD [Home Depot]
– The company reduced its holdings in the world’s largest home improvement retailer by about 25.46% or 942,102 shares, to a total of 2,757,898 shares down from 3,700,000 shares.

KMX [Carmax]
– For 4 quarters straight, the stake in the used car retailer has been reduced.  This quarter it has been reduced by about 25% to 9,000,000 shares down from 12,000,000.

MCO [Moody’s Corp.]
– The filing’s report indicates no increase or decrease in its holdings, at 48,000,000 shares.  However the 13G filing on 7/23/2009 indicates a reduction in the shares of the credit ratings research and analysis company.  Berkshire reduced its holdings on 7/21/2009 by about 20% to 40,013,700 shares after Q2 (6/30/2009).

UNH [United Health Group]
– Again, the holdings of the health insurer was reduced. This quarter holdings decreased by 24.44% or 1,100,000 shares to 3,400,000 shares.

WLP [WellPoint Inc.]
– The holdings of the health benefits company was reduced by 26.74% or 1,277,300 shares to 3,500,000 shares, down from 4,777,300 shares in Q1.

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Other comments:

USB [US Bancorp]
– The company did not increase or decrease its holdings in any of the other financial service companies such as Bank Of America (BAC), US Bancorp (USB), Wells Fargo & Co (WFC), or American Express (AXP).

Last quarter (Q1) Berkshire increased its holdings in USB by about 2.2% to a total of 69,039,426 shares after having reduced the number of shares in Q4 2008.  In Q1 it also increased its holdings of WFC by around 4.26% to a total of 302,609,212 shares.  If we recall, the media circus created a huge uproar accusing Buffett of bailing out of the US financial system and America when he sold the USB shares in Q4 2008.  Buffett mentioned the reduction move was to free up capital.  However, when he purchased more shares in both banks, there was little criticism or praise in the move by the media.

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– Another interesting note is that Berkshire did not reduce his holdings in any building or materials related companies in Q1, but did so this quarter.  However, he only reduced his holdings in one company, Home Depot (HD).  There was no change in the holdings of Lowes (LOW), or USG Corp (USG) though.  It should be noted though, that these companies are still the dominant players in their perspective industries.

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SEC Filing:
You can view the official SEC filing which discloses Berkshire Hathaway stock holdings here:
http://www.sec.gov/Archives/edgar/data/1067983/000095012309035453/v53429ae13fvhr.txt

The filing does not differentiate between investments Berkshire Hathaway makes and investments its subsidiaries make, or investments Warren Buffett himself makes as the chairman and chief executive of the company.  Buffet usually makes his stock investments for Berkshire Hathaway through his insurance arms (Berkshire Hathaway Life Insurance Co. of Nebraska, Columbia insurance Co, GEICO, National Indemnity Co, Wesco, etc.).
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I always mention to people who are investing or following Warren Buffett’s stock purchases/sales, that it is easy to follow and copy his moves.  However, we only learn of his actions months after it has been done (SEC filing is always a bit later for Berkshire Hathaway), and we would never know for sure why the move was made or what other reasons are behind the idea.  Were they just temporary reductions such as in USB and JNJ?  Is it because he no longer likes something about the businesses?  Could it be a move to free up capital or reduce taxes?  Why buy/sell one company over another similar company?  What investment need does a purchase fill in his overall strategy for the company?

If you asked Warren Buffett what stocks he recommends, or what is better than following his investment moves, he’ll likely answer that he does not recommend following his moves for the reasons listed above.  He would also likely recommend learning for yourself, rather than recommended any particular stocks.  Buffett is a teacher at heart, having taught courses in University, just like his own mentor Benjamin Graham did.  But he also teaches his shareholders by publishing his principles and knowledge in his annual reports and letters to shareholders.  Investing and investment choices depend largely on the plan, situation, temperament, knowledge, and other characteristics of the individual investor.

So where should you start learning so you can invest like Warren Buffett does?  For starters read his current and past annual reports from the Berkshire Hathaway website.  They have a huge amount of information in them.  Next read books that he specifically endorses and recommends.  The following is list of them that I have also read and highly recommend:

Recommended Warren Buffett Related Books:

The Intelligent Investor (Benjamin Graham)
Amazon.com Amazon.ca Chapters.ca
[Amazon.com version includes preface by Warren Buffett, and is recommended over the other versions]
[Buffett has recommended Intelligent Investor before to his shareholders and individual investors!]

Securities Analysis: 6th Edition (Benjamin Graham)
Amazon.com Chapters.ca
[Not available at Amazon.ca]
[Buffett has recommended Securities Analysis before to his shareholders and individual investors!]

The Snowball: Warren Buffett & The Business of Life (by Alice Schroeder)
Amazon.com Amazon.ca Chapters.ca

The Warren Buffett Way (Robert G. Hagstrom)
Amazon.com Amazon.ca Chapters.ca

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Thanks & Happy Investing!
The Investment Blogger © 2009

Author: The Investment Blogger

I’m a private investor, who developed the “function-centric investing” paradigm. I am an investor who blogs a little here and there, rather than a blogger who invests a little here and there. I'm passionate about investing and sharing investment knowledge!

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2 Comments

  1. Dear Sir/Madame,

    In March of this year I sold all my , or should I say what was left of my Canadian stock portfolio . The S&P 500 was at 668 on the 9th of March , by the 25th of March I started replacing the Canadian stocks with U.S. stocks . The stock I bought are all from the Golden Haystack . I am up 67.45 percent . Would that be considered a good improvement or just average ?

    Best Regards,

    R.J.Kemp

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