Every quarter, many money managers have to disclose what they've bought and sold, via "13F" filings. Their latest moves can shine a bright light on smart stock picks.
Today, let's look at investing giant Warren Buffett. His Berkshire Hathaway Inc. (NYSE:BRK.A) company has increased its per-share book value by an annual average of 20% between 1965 and 2011, leaving the S&P 500 in the dust with its 9%. 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 $75.3 billion in value as of Dec. 31, 2012.
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 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 whom may end up succeeding Buffett at the company's investment helm. They're 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.
Interesting developments So what does Berkshire Hathaway's latest quarterly 13F filing tell us? Here are a few interesting details:
Berkshire Hathaway didn't sell out of any positions completely, but it did add a few.
The biggest new holdings are Archer Daniels Midland Company (NYSE:ADM) and Verisign, Inc. (NASDAQ:VRSN). Farming giant ADM is the world's largest corn producer, poised to benefit from the world's growing population. Recent quarterly results showed a sixfold increase in profits due in part to robust oilseed demand. Drought conditions over the past year, though, results in record crop insurance claims, and ADM is a crop insurer.
VeriSign, an Internet infrastructure services company, recently posted solid fourth-quarter results, with revenue up 13% over year-ago levels and operating margins surging by nearly 30%. The company also realized a net gain in registered domain names of 6.4% for the year. It raised its registry fee for .net names by 10%. VeriSign enjoys recurring revenue, and is also looking into developing new sources of revenue.
Among holdings in which Berkshire Hathaway increased its stake were National-Oilwell Varco, Inc. (NYSE:NOV) and Precision Castparts Corp. (NYSE:PCP) -- both, interestingly, are recommendations of our Stock Advisor newsletter. National Oilwell Varco is the biggest U.S. maker of oil-field equipment and was recently sporting a record capital-equipment backlog of nearly $12 billion. (It has actually been reporting other record numbers recently, too.) It's also involved in the profitable offshore drilling arena (which the company sees growing in 2013), and has been growing in part via acquisitions as well.