Warren Buffett‘s Berkshire Hathaway personifies value investing and the importance of patience that is its manager’s hallmark. This is exemplified by the fund’s recent 13F filing with the SEC, which shows that Buffett’s top picks in terms of their contribution to his portfolio remained nearly the same, which has been the case for several years. Thus, it is no surprise that among the fund’s top five picks, changes were made to only one position. Buffett made additional stock purchases of International Business Machines Corp. (NYSE:IBM), initiated two relatively small positions, and closed only three positions during the last quarter, while many hedge funds had large turnovers in their holdings, according to their own 13F filings of late.
It is nearly impossible to summarize the achievements of Warren Buffett as an investor. If any phrase could even partly capture his record of stock picking since 1951, it would be the title that the finance community has bestowed upon him, ‘Oracle of Omaha’, on account of his seemingly clairvoyant ability when it comes to picking the right companies to invest in. Berkshire Hathaway also owes some of its success to its Vice Chairman, Charlie Munger. Investors of the holding company will have a rare honor of receiving investor letters from both business magnates this year as they describe the journey of Berkshire Hathaway over the last fifty years, and the future outlook for the holding company in the following five years.
Buffett’s largest holding during the last quarter was in Wells Fargo & Co (NYSE:WFC), and the stake in the company remained unchanged at 463.46 million shares valued at $25.41 billion. The position comprises 23.23% of Berkshire’s portfolio value. Wells Fargo & Co (NYSE:WFC) has been a longtime favorite of Buffett’s. Although nearly flat year-to-date, the stock is up nearly 17% over the past calendar year. In its fourth quarter earnings report, the mortgage lender’s Earnings per Share (EPS) met analysts’ estimates of $1.02 on revenue of $21.4 billion, which was slightly higher than anticipated.
However, the contraction of the company’s net interest margin for the second straight quarter was a little worrisome for investors, as it slid to 3.04% from 3.27% in the fiscal fourth quarter of 2014. Those concerns hindered an otherwise good earnings report from boosting Wells Fargo & Co (NYSE:WFC)’s stock this year.
The Coca-Cola Co (NYSE:KO)‘s contribution to Berkshire’s portfolio was down from 15.74% at the end of third quarter to 15.44% at the end of the fourth. As no shares were sold, the decrease was primarily due to a 2.4% drop in the company’s stock price. Currently, Buffett holds an even 400 million shares of The Coca-Cola Co (NYSE:KO), which are valued at nearly $16.89 billion. Boykin Curry‘s Eagle Capital Management is another significant investor of The Coca-Cola Co (NYSE:KO). After shedding about 2.43 million shares during the last quarter, Curry now owns 22.35 million shares valued at $943.83 million.
American Express Company (NYSE:AXP) was Buffett’s third largest holding at the end of the fourth quarter, comprising 12.90% of his portfolio’s value. The stake of 151.61 million shares, valued at $14.11 billion also remained unchanged. Ken Fisher‘s Fisher Asset Management is another significant holder of American Express Company (NYSE:AXP). As of the latest filing the fund owns about 11.26 million shares valued at $1.05 billion. The position represents 2.16% of Fisher’s equity portfolio, making it his fifth largest position.
Despite (or perhaps because of) a 13.75% dip in International Business Machines Corp. (NYSE:IBM)’s stock price since the end of September last year, Buffett increased his stake in the company by 6.49 million shares during the fourth quarter, a 9% increase. Currently, he owns 76.97 million shares valued at $12.35 billion. The contribution of the stake in Buffett’s portfolio stands at 11.29%.
International Business Machines Corp. (NYSE:IBM) has been affected by years of sliding revenues and earnings, which it has been compensating for in terms of stock price by executing share repurchases and paying out dividends to shareholders. However, according to another disappointing earnings release in the fourth quarter, the company is cutting back on repurchases while the forward guidance provided also looked grim. Buffett is known to pick up companies when they are selling at a discount, and for him this seemed like the moment to further increase his stake.
Wal-Mart Stores, Inc. (NYSE:WMT) also has the Oracle of Omaha’s vote of confidence as it boasts a stake of 60.39 million shares comprising 4.75% of Buffett’s portfolio value. The position itself had a market value of $5.19 billion. Although up about 15% over the last twelve months, shares of Wal-Mart Stores, Inc. are down about 1.7% year-to-date. The company released its fourth quarter earnings report recently, which showed an EPS of $1.61, beating estimates by $0.07. The company meagerly increased its yearly dividends by 2% against the historical annual growth figure of nearly 14%, owing to higher capital expenditure needs in the future. The revised annual dividend stands at $1.96. These funds will be mostly directed towards new stores and e-commerce. Wal-Mart Stores, Inc. also recently increased the wage of over half of its workforce to $9 per hour, a 24% increase above the federal minimum wage of $7.25. That minimum pay rate rises again, to $10.00 per hour, in February, 2016.
Boykin Curry’s Eagle management lacked this same confidence or patience in the massive chain of retail stores, as it reduced its position in Wal-Mart by just under 6.0 million shares during the last quarter. The stake, which now comprises 5.1 million shares now represents only 1.65% of the fund’s portfolio value, down from 3.28% in the third quarter.
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