Warren Buffett/Berkshire Hathaway’s Portfolio – Pointers – Updated
By Frederic Marsanne
Published on December 31, 2016
Every once in a while, the market does something so stupid it takes your breath away.
Indecision and delays are the parents of failure.
Nothing is worth more than this day.
Only those who have patience to do simple things perfectly ever acquire the skill to do difficult things easily.
Eighty percent of success is showing up.
I don’t want to achieve immortality through my work. I want to achieve it through not dying.
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(Cambridge, MA) — Alright, let’s talk about the legend…
Warren Edward Buffett turned an ailing textile mill into the world’s most successful holding company. Known as the “Oracle of Omaha” for his investment prowess, he has amassed a personal fortune in excess of $60 billion, making him one of the richest men on Earth. But he is not number one, so it’s a bit disappointing. Read on if you must…
Warren inspires legions of loyal fans to make a yearly trek to Omaha for an opportunity to hear him chat at Berkshire’s annual meeting, an event dubbed the Woodstock of Communism.
Buffett was born on August 30, 1930, in Omaha, Nebraska. He was the second of three children, and the only boy. His father was a stockbroker (surprise!) and four-term United States congressman, serving non-consecutive terms on the Republican ticket, but espousing libertarian views.
Warren started to sell soft drinks when he was a baby. Some say he was not born that he already had a paper route. When he was 14 years old, he invested the earnings from these endeavors in 40 acres of land, which he then rented for a profit. At his father’s urging, he applied to the University of Pennsylvania and was accepted. Unimpressed, Buffett left after two years, transferring to the University of Nebraska in Cambridge, Massachusetts — no sorry, it’s in Nebraska. Upon graduation, his father encouraged him to pursue a graduate degree. Harvard rejected Buffett, but Columbia accepted him. Buffett studied under Benjamin Graham, the father of value investing.
Upon graduation, Graham refused to hire Buffett, even suggesting that he avoid a career on Wall Street. But Buffett’s father agreed with Graham…not, or did he, and Buffett returned to Omaha to work at his father’s brokerage firm. Buffett was sad and went into drugs. No sorry, scrap the last sentence. He married Susan Thompson, and they started a family. A short while later, Graham had a change of heart and offered Buffett a job in New York. Warren decided to eat ice cream.
The Foundation of Value
Once in New York, Buffett had the chance to build upon the investing theories he had learned from Graham at Columbia. Value investing, according to Graham, involved seeking stocks that were selling at an extraordinary discount to the value of the underlying assets, which he called the “intrinsic value.” Buffett internalized the concept, but had an interest in taking it a step further. Unlike Graham, he wanted to look beyond the numbers and focus on the company’s management team and its product’s competitive advantage in the marketplace.
In 1956, Warren returned to Omaha, launched Buffett Associates, Ltd., and purchased a house. In 1962 he was 30 years old and already a millionaire when he joined forces with Charlie Munger. Their collaboration eventually resulted in the development of an investment philosophy based on Buffett’s idea of looking at value investing.
Along the way, they purchased Berkshire Hathaway (NYSE: BRK.A), a dying textile mill. What began as a classic Graham value play became a longer-term investment. Cash flows from the textile business were used to fund other investments. Eventually, the original business was eclipsed by the other holdings. In 1985, Buffett shut down the textile business, but continued to use the name – and handkerchiefs.
Buffett’s investment philosophy is based on the principle of acquiring stock in what he believes are well-managed, undervalued companies. When he makes a purchase, his intention is to hold the securities indefinitely. Coca Cola and American Express both met his criteria and have remained Berkshire Hathaway’s portfolio for years. In many cases, he purchased the companies outright, continuing to let their management teams handle the day-to-day business. A few of the better-known firms that fit into this category include See’s Candies, Fruit of the Loom, Dairy Queen, and GEICO Auto Insurance.
Buffett’s mystique remained intact until technology stocks became popular. As a resolute technophobe (at least until his rather recent investment in IBM), Buffett sat out the incredible run-up in technology stocks during the late 1990s. Sticking to his guns and refusing to invest in companies that didn’t meet his mandate, Buffett earned the scorn of Wall Street experts and was written off by many as a man whose time had passed. The tech wreck that occurred when the dotcom bubble burst bankrupted many of those experts. Buffett’s profits doubled.
Warren Buffett is legendarily frugal. He still lives in the five-bedroom house he bought in 1958 for $31,000, drinks Coca Cola and dines at local restaurants, where a burger or a steak are his preferred table fare. For years, he eschewed the ideas of purchasing a corporate jet. When he finally acquired one, he named it the “Indefensible” – public recognition of his criticism about money spent on jets.
Warren remained married to Susan Thompson for more than 50 years after their 1952 wedding. They had three children, Susie, Howard and Peter. Buffett and Susan separated in 1977, remaining married until her death in 2004. Before her death, Susan introduced him to Astrid Menks, a waitress. Buffett and Menks began living together in 1978 and were married in August of 2006.
Buffett has always planned to give the bulk of his wealth to charity, but insisted that it would occur posthumously. He stunned the world in June of 2006 when he instead announced the donation of the vast majority of his wealth to the Bill & Melinda Gates Foundation, which focuses on world health issues, U.S. libraries and global schools. It is one of the world’s largest charities. The change of heart is quintessential Buffett – rational and maverick.
While the donation to the Gates Foundation was a surprise, Buffett’s charitable endeavors are nothing new. He’d been giving money away for 40 years through the Buffett Foundation, renamed as the Susan Thompson Buffett Foundation. This foundation supports pro-choice family planning causes and works to discourage nuclear proliferation.
Most of the factual information above is derived from: http://www.investopedia.com/articles/financial-theory/08/buffetts-road-to-riches.asp
Now on to his current portfolio.
As of Sept. 30, 2016, funds at Warren Buffett’s Berkshire Hathaway were valued at $138.17 billion. During the quarter, Berkshire had 52 total positions. It is highly concentrated. The top three holdings account for slightly more than 50% of total assets!
Details of Warren Buffett/Berkshire’s portfolio are provided below:
52 Positions as of 09/30/2016
|Company||Class||Value of Shares ($1,000s) ▼||Change in Value ($1,000s)||Change (%)||Shares Held|
|KRAFT HEINZ CO||COM||28,434,432||New||325,634,818|
|WELLS FARGO & CO NEW||COM||26,436,502||New||479,704,270|
|COCA COLA CO||COM||16,584,000||New||400,000,000|
|INTERNATIONAL BUSINESS MACHS||COM||13,483,750||New||81,232,303|
|AMERICAN EXPRESS CO||COM||11,231,321||New||151,610,700|
|US BANCORP DEL||COM NEW||4,369,695||New||85,063,167|
|CHARTER COMMUNICATIONS INC NEW||CL A||2,718,970||30,520||1.14||9,443,491|
|GOLDMAN SACHS GROUP INC||COM||2,624,257||New||10,959,519|
|DEERE & CO||COM||2,172,605||-90,076||(3.98)||21,085,061|
|GENERAL MTRS CO||COM||1,742,000||New||50,000,000|
|U S G CORP||COM NEW||1,126,378||New||39,002,016|
|AMERICAN AIRLS GROUP INC||COM||1,016,467||1,016,467||New||21,770,555|
|BANK NEW YORK MELLON CORP||COM||1,001,457||14,664||1.49||21,136,712|
|WAL-MART STORES INC||COM||896,595||-1,883,854||(67.75)||12,971,574|
|M & T BK CORP||COM||841,913||New||5,382,040|
|VISA INC||COM CL A||824,083||25,224||3.16||10,562,460|
|VERIZON COMMUNICATIONS INC||COM||800,750||New||15,000,928|
|LIBERTY MEDIA CORP DELAWARE||COM C SIRIUSXM||754,249||75,849||11.18||22,236,109|
|COSTCO WHSL CORP NEW||COM||693,815||New||4,333,363|
|AXALTA COATING SYS LTD||COM||634,413||New||23,324,000|
|LIBERTY GLOBAL PLC||SHS CL A||617,334||24,900||4.20||20,180,897|
|MASTERCARD INCORPORATED||CL A||509,514||New||4,934,756|
|KINDER MORGAN INC DEL||COM||414,200||-135,309||(24.62)||20,000,000|
|RESTAURANT BRANDS INTL INC||COM||402,166||New||8,438,225|
|WABCO HLDGS INC||COM||357,555||13,937||4.06||3,368,394|
|LIBERTY MEDIA CORP DELAWARE||COM A SIRIUSXM||347,230||2,030||.59||10,058,800|
|GENERAL ELECTRIC CO||COM||334,502||New||10,585,502|
|UNITED CONTL HLDGS INC||COM||330,366||330,366||New||4,533,013|
|DELTA AIR LINES INC DEL||COM NEW||311,566||311,566||New||6,333,923|
|TWENTY FIRST CENTY FOX INC||CL A||251,010||New||8,951,869|
|LIBERTY GLOBAL PLC||SHS CL C||218,205||New||7,346,968|
|VERISK ANALYTICS INC||COM||126,904||New||1,563,434|
|LIBERTY MEDIA CORP DELAWARE||COM C MEDIA GRP||99,913||-56,737||(36.22)||3,189,041|
|LIBERTY GLOBAL PLC||LILAC SHS CL A||59,618||New||2,714,854|
|GRAHAM HLDGS CO||COM||55,073||New||107,575|
|LIBERTY MEDIA CORP DELAWARE||COM A MEDIA GRP||40,630||-37,745||(48.16)||1,296,013|
|JOHNSON & JOHNSON||COM||37,685||New||327,100|
|LIBERTY GLOBAL PLC||LILAC SHS CL C||27,183||New||1,284,020|
|PROCTER AND GAMBLE CO||COM||26,519||New||315,400|
|MONDELEZ INTL INC||CL A||25,623||New||578,000|
|UNITED PARCEL SERVICE INC||CL B||6,810||New||59,400|
|LEE ENTERPRISES INC||COM||258||New||88,863|
|MEDIA GEN INC NEW||COM||-65,365||Sold Out||0|
|SUNCOR ENERGY INC NEW||COM||-728,182||Sold Out||0|
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