What Warren's Been Doing.
We recently updated Warren Buffett's performance since he published his famous editorial about buying stocks last year. http://lumencapital.blogspot.com/2009/11/tsionna-warren-buffett.html 24/7 Wall Street took a look at Buffett's recent filings and came away with some interesting thoughts. I thought I'd excerpt this and throw my two cents in @ the end. Highlights are mine.
This was an important week for investment guru and billionaire watchers to see which gurus were holding which stocks. The full public equity holdings of Warren Buffett via Berkshire Hathaway Inc. (NYSE: BRK-A) were particularly of note, particularly with those B shares under “BRK-B” soon to split and giving a chance for even the less astute ranks of Joe Public to own a piece of the Berkshire dream. Obviously the huge change is via the Burlington Northern Santa Fe Corp. (NYSE: BNI) buyout.....The rail transport play now accounts for about one-quarter of the total Berkshire Hathaway entity upon closing. But the less obvious position in that Warren Buffett in 2009 has made it clear that there will be a simpler and probably less “stock-hound” version of Berkshire Hathaway ahead.
Buffett has been going higher up the food chain and is likely to be a creditor now inside or to large institutions. We have seen this during the crisis. Buffett negotiated a better deal for Goldman Sachs Group (NYSE: GS) than the US Government was able to get. Buffett’s preferred stock in Goldman Sachs has a dividend of 10% and is callable at any time at a 10% premium; but Buffett also got warrants to purchase $5 billion of common stock with a strike price of $115.00 per share, exercisable for a five-year term (4 years now), and Buffett would effectively get to pocket $61 per share if he exercised those all today at the market (and with a $2.6 billion warrant profit alone).
{in regards to} General Electric Co. (NYSE: GE) {Buffett's}stake was listed only as 7.77 million shares of common stock (about $125 million now), the same as it has been for quarters. Yet last year Buffett came to the rescue with a $3 billion of perpetual preferred stock in a private offering with a dividend of 10% and warrants to purchase $3 billion of common stock. The preferred is callable after 3-years (2 years now) at a 10% premium; the warrants have a strike price of $22.25 and are exercisable for a five-year term (4 years now).Two other investments in preferred or note offerings made in the last year during the financial crunch were in Tiffany & Co. (NYSE: TIF) in February via 10% senior notes and in Harley-Davidson, Inc. (NYSE: HOG) with a 15% rate. Neither of these are in the Buffett equity holdings.......
Buffett increased his holdings in Wal-Mart Stores Inc. (NYSE: WMT).....With over 10% officially unemployed in the U.S., Wal-Mart has become the shopping destination of millions more of Americans and that value and thrift trend is not likely to end any time soon.
Then there is the ConocoPhillips (NYSE: COP) bet that Buffett got his timing very wrong on. He cut his stake again....and still has the tax benefit for selling. He added Exxon Mobil Corp. (NYSE: XOM) with a 1.27 million share stake. As Exxon is the largest company by market cap at $357 billion, this is much easier for Buffett to invest into rather than $79 billion market cap today in ConocoPhillips.....
The Wells Fargo & Company (NYSE: WFC) stake which he grew yet again is worth over $8.7 billion...
Then there are the overseas bets, and these are just some:
$2.5 billion into diversified Swiss Reinsurance Co. Ltd.
$4 billion to buy control of Iscar Metalworking in Israel
$230 million for a 10% stake in BYD for electric batteries in China
$144 million or so stake in Nestle
Buffett lent $4.4 billion to Mars for the Wrigley buyout. He also lent Dow Chemical (NYSE: DOW) $3 billion for part of the Rohm & Haas deal. As noted earlier, Buffett is going higher up the food chain. In fact, he is almost becoming the default alternative investment bank. And he has been cutting down and exiting equity positions as well.
....This now makes Berkshire Hathaway even more of a financial and transport operation, with far less emphasis on public common stock bets. And he is going higher on the food chain.......{W}hat is obvious is that he is starting to get out of the way of some bets and make more concentrated bets elsewhere. The new Berkshire Hathaway is more of a financial and transportation operator now… more than ever… that is also acting as private investment banker. The investment changes over the last year are showing more of a penchant for debt and being higher up the food chain than just common stock in the U.S.
This all acts to make Berkshire Hathaway more predictable in operations and even more of a true conglomerate. And it makes the passive investments a bit more opaque.
Link: http://247wallst.com/2009/11/19/the-more-focused-and-more-opaque-buffett-berkshire-hathaway-brk-a-brk-b-bni-unp-nsc-gs-ge-tif-hog-wmt-cop-xom-wfc-rsg-dow-etn-wbc-mco-wlp-unh-gsk-sny-gci-wpo/#more-53980
Buffett has been going higher up the food chain and is likely to be a creditor now inside or to large institutions. We have seen this during the crisis. Buffett negotiated a better deal for Goldman Sachs Group (NYSE: GS) than the US Government was able to get. Buffett’s preferred stock in Goldman Sachs has a dividend of 10% and is callable at any time at a 10% premium; but Buffett also got warrants to purchase $5 billion of common stock with a strike price of $115.00 per share, exercisable for a five-year term (4 years now), and Buffett would effectively get to pocket $61 per share if he exercised those all today at the market (and with a $2.6 billion warrant profit alone).
{in regards to} General Electric Co. (NYSE: GE) {Buffett's}stake was listed only as 7.77 million shares of common stock (about $125 million now), the same as it has been for quarters. Yet last year Buffett came to the rescue with a $3 billion of perpetual preferred stock in a private offering with a dividend of 10% and warrants to purchase $3 billion of common stock. The preferred is callable after 3-years (2 years now) at a 10% premium; the warrants have a strike price of $22.25 and are exercisable for a five-year term (4 years now).Two other investments in preferred or note offerings made in the last year during the financial crunch were in Tiffany & Co. (NYSE: TIF) in February via 10% senior notes and in Harley-Davidson, Inc. (NYSE: HOG) with a 15% rate. Neither of these are in the Buffett equity holdings.......
Buffett increased his holdings in Wal-Mart Stores Inc. (NYSE: WMT).....With over 10% officially unemployed in the U.S., Wal-Mart has become the shopping destination of millions more of Americans and that value and thrift trend is not likely to end any time soon.
Then there is the ConocoPhillips (NYSE: COP) bet that Buffett got his timing very wrong on. He cut his stake again....and still has the tax benefit for selling. He added Exxon Mobil Corp. (NYSE: XOM) with a 1.27 million share stake. As Exxon is the largest company by market cap at $357 billion, this is much easier for Buffett to invest into rather than $79 billion market cap today in ConocoPhillips.....
The Wells Fargo & Company (NYSE: WFC) stake which he grew yet again is worth over $8.7 billion...
Then there are the overseas bets, and these are just some:
$2.5 billion into diversified Swiss Reinsurance Co. Ltd.
$4 billion to buy control of Iscar Metalworking in Israel
$230 million for a 10% stake in BYD for electric batteries in China
$144 million or so stake in Nestle
Buffett lent $4.4 billion to Mars for the Wrigley buyout. He also lent Dow Chemical (NYSE: DOW) $3 billion for part of the Rohm & Haas deal. As noted earlier, Buffett is going higher up the food chain. In fact, he is almost becoming the default alternative investment bank. And he has been cutting down and exiting equity positions as well.
....This now makes Berkshire Hathaway even more of a financial and transport operation, with far less emphasis on public common stock bets. And he is going higher on the food chain.......{W}hat is obvious is that he is starting to get out of the way of some bets and make more concentrated bets elsewhere. The new Berkshire Hathaway is more of a financial and transportation operator now… more than ever… that is also acting as private investment banker. The investment changes over the last year are showing more of a penchant for debt and being higher up the food chain than just common stock in the U.S.
This all acts to make Berkshire Hathaway more predictable in operations and even more of a true conglomerate. And it makes the passive investments a bit more opaque.
Link: http://247wallst.com/2009/11/19/the-more-focused-and-more-opaque-buffett-berkshire-hathaway-brk-a-brk-b-bni-unp-nsc-gs-ge-tif-hog-wmt-cop-xom-wfc-rsg-dow-etn-wbc-mco-wlp-unh-gsk-sny-gci-wpo/#more-53980
*Long General Electric, Exxon, & Wells Fargo in certain legacy accounts. No direct positions in any of the other stocks mentioned however it is likely that they are all in certain ETFs that I own for client and individual accounts.
posted by CR English at 6:29 AM
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