In his highly anticipated letter to shareholders, the Oracle of Omaha drops little gems for his readers. This year the Chairman of Berkshire Hathaway Inc. (NYSE:BRK.B) didn't disappoint either. Here are some of the notable investing themes and tips from Mr. Buffett.
1. Buffett Still Likes Big Blue and Wells Fargo & Co (NYSE:WFC)
Of the "Big Four" investments in Berkshire's common stock portfolio, the company continued to ramp up purchases of International Business Machines Corp. (NYSE: IBM). As a result, Berkshire now owns roughly 6% of Big Blue, and this will notch up higher as IBM has a massive share repurchase plan in place. IBM bought back shares worth $12 Billion in the last year, which was a key driver for the stock price.
Buffett likes Wells Fargo & Co (NYSE:WFC) a lot and added more shares recently. In fact, Wells Fargo & Co (NYSE:WFC) ousted The Coca-Cola Company (NYSE: KO) to be largest common stock holding in Berkshire's portfolio. And rightly so, the conservatively managed bank has been hitting record net income numbers while improving its ROE simultaneously, it is even buying back shares as well. Berkshire now owns more than 8.7% of Wells Fargo & Co (NYSE:WFC), which is almost certain to go up in the near future.
2. Ever Optimistic About the US
Buffett has always been one of the most vocal proponents of the country's bright future, even during economic downturns. And his optimism continues, Berkshire spent $9.8 Billion on plant and equipment in F'12, 88% of which was in the U.S.
And he expects to spend even more in capital expenditures in 2013. In his words, "The Dow Jones Industrials advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions. And don't forget that shareholders received substantial dividends throughout the century as well. "
3. Investment Managers Are Outperforming
Berkshire’s new duo of investment managers, Ted Weschler and Todd Combs are doing very well. In fact, both of them outperformed the S&P 500 by more than 10%, and did better than Mr. Buffett himself. As a result, the fund allocation to each has been notched up to roughly $5 billion. As a result, both Todd and Ted now have a much bigger say in Berkshire's oversized portfolio.
The duo will certainly do well over time, and their largest bet has been on DIRECTV (NASDAQ: DTV), in which the combined holdings of both at year end 2012 were worth $1.15 billion. Investors should take heed; the duo will almost certainly take on the CIO role in the post-Buffett era.
4. Berkshire Hathaway Is the Best Mutual Fund in the World?
This phrase has been coined numerous times before, and rightly so. Unlike numerous other mutual funds, there is no front-load or back-end fees, management fees, marketing fees etc. And even better, Berkshire Hathaway doesn't engage in high volume trading that many mutual funds do, often to align themselves with an index or their own investment mandate, both of which impact the performance.