In the world of investing, Warren Buffett is king, so when his Berkshire Hathaway (NYSE:BRKA) dumps almost all of its stakes in two major Dow players, investors sit up and take notice.
Berkshire has all but eliminated its position in Johnson & Johnson(NYSE:JNJ) and General Electric (NYSE:GE), according to its 13-F filing with the Securities and Exchange Commission. The company held just over 492,000 shares of J&J as of September 30 — that’s down 95 percent from the 10.3 million shares it reported holding as of June 30. Berkshire’s GE stock has been slashed to 588,900 shares, down 88 percent from just north of five million shares three months earlier.
Unsurprisingly, shares turned negative following the news. Buffett’s decisions have the power to do that — news of changes to his portfolio can sometimes be as potent a stimulus as earnings.
But Buffett isn’t pulling all the strings anymore. The hedge fund’s partial liquidation of some massive holdings suggests the transfer of more investment duties to the next generation of Berkshire stock pickers: Todd Combs and Ted Weschler, Berkshire’s new portfolio managers.
Berkshire significantly decreased its holdings in United Parcel Service (NYSE:UPS), Lee Enterprises (NYSE:LEE), and Kraft Foods Inc., before the spin-off that resulted in two separate publicly-traded companies. Visa (NYSE:V), Verisk Analytics (NASDAQ:VRSK), ConocoPhillips(NYSE:COP), Procter & Gamble (NYSE:PG), and US Bancorp (NYSE:USB) were also cut, though Berkshire held on to the majority of its share in each.
Berkshire also eliminated positions in some relatively new holdings, CVS Caremark Corp.(NYSE:CVS) and Dollar General Corp. (NYSE:DG), again suggesting that the hedge fund’s new talent, handpicked by Buffett himself, is taking Berkshire in a new direction.
Berkshire added Deere & Co. (NYSE:DE) to its portfolio, buying almost 4 million shares worth $337 million in total. The SEC filing also shows Berkshire owned 1,248,901 shares of Precision Castparts (NYSE:PCP) at the end of the quarter, a stake worth $216 million, and almost 1.6 million shares of Wabco Holdings (NYSE:WBC), worth $92 million.
The hedge fund also increased its stake in General Motors (NYSE:GM) by 50 percent, up 5 million shares to 15 million. Berkshire’s stake in National Oilwell (NYSE:NOV) was up 47 percent for the quarter, while its stake in Viacom (NYSE:VIAB) was up 12 percent. Bank of America (NYSE:BAC), DirecTV (NASDAQ:DTV), Wells Fargo (NYSE:WFC), and IBM (NYSE:IBM) also gained favor in the quarter, with Berkshire increasing its stake in the mid-single digits for each.
The moves, disclosed in a regulatory filing on Wednesday, reveal an uncommonly active quarter for the hedge fund, with Buffett, Combs, and Weschler selling more stocks than they bought. Buffett continued to trim his stakes in J&J, P&G, and Kraft, as he has been doing in recent quarters, passing along some of the proceeds from his sales to Combs and Weschler as they take on a larger role managing the fund’s assets.
So far, the shift seems to be going smoothly. The total value of Berkshire’s U.S. stock portfolio rose in the September-ending quarter to $75.3 billion, up from $74.3 billion at the end of June. Berkshire’s Class A shares (NYSE:BRKA) currently have a market capitalization of $212.24 billion, while its Class B shares (NYSE:BRKB) have a market cap of $211.81 billion
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