Investment Insights from Warren Buffett’s Big Buys: Wells Fargo & Company (WFC) and More

Page 1 of 2

This article looks into the fourth quarter big buys of Warren Buffett’s Berkshire Hathaway. Mr. Buffett needs no introduction, and every move he makes is considered with the highest regard.  In the fourth quarter, Berkshire Hathaway had $75.3 billion assets under management. Its big buys were Wells Fargo & Company (NYSE:WFC), DaVita HealthCare Partners Inc (NYSE:DVA), General Motors Company (NYSE:GM), WABCO Holdings Inc. (NYSE:WBC), and Archer Daniels Midland Company (NYSE:ADM). In search for really good investment insights, I have analyzed these companies briefly from a fundamental perspective.

Sources: finviz.com, nasdaq.com, and whalewisdom.com; as of Feb. 14, 2013

Wells Fargo & Co (NYSE:WFC)Wells Fargo

The fund manager bought 17.308 million more shares of Wells Fargo in the fourth quarter; these additional shares are worth around $590 million. The bank is Berkshire Hathaway’s top stock, with a share equivalent to 19.96% of its total portfolio. WFC is destined for greatness; it has consistently exceeded consensus estimates in earnings for the last four consecutive quarters. This is attributed to consistent positive revenue growth and impressive profit margins of over 20 percent. Investors can therefore sit back and relax, for their dividend income is safe and growing at WFC. The company has doubled its dividend payments in the past couple of years.  For instance, in 2010 the annualized payment was a mere 20 cents per share; it went up in 2011 to 48 cents, then to 88 in 2012. Also, if you think that the current surge in the stock price is about to peak, consider that WFC’s valuation is still at a healthy level with a P/E ratio of 10.48 and a PEG at a pretty level of 1.17. Furthermore, earnings are estimated to grow at an average rate of 8.9 percent in the next five years.

DaVita

Berkshire Hathaway increased its stake in the health services company DaVita by 33 percent in the latest quarter. The holding was equivalent to 2 percent of the fund manager’s portfolio. Although DVA managed to surpass earnings estimates in the previous quarters, it has failed to do so in the latest quarter (ending in September 2012.) Meanwhile, the company has maintained its profit margin of 7 to 8 percent. Recently, it has been impressively growing its revenues at a double-digit rate. As of September 2012, its profit margin was 11.67%, way higher than it was in the same period in 2011 at 6.56%. In the next 5 years, earnings at DaVita are expected to grow by over 13 percent annually.

General Motors

Berkshire Hathaway also bought 10 million additional shares of General Motors common stock in the fourth quarter, bringing the total holding to 25 million shares worth over $720 million. This does not come as a surprise, as the company has remarkably exceeded consensus estimates within the last 3 consecutive quarters. In fact, the surprise rate in the quarter ending in Sept. 2012 was an impressive 52%. The motor company’s profit margin is at a stable rate of 3 percent, while revenue has recently grown at a positive rate of 2.33%.  GM’s growth prospects are encouraging, with earnings estimated to grow by an average rate of about 12 percent in the next 5 years.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!