Warren Buffett Increased His Bets on These Stocks

Warren Buffett is widely regarded as one of the most successful investors in the world. Ordinary investors follow him. Seasoned professional money managers also follow him closely. Buffett recently released Berkshire Hathaway’s latest stock holdings in a 13F filing. The positions at the end of the fourth quarter are not very different from those at the end of the third quarter. But Buffett still made some changes. In this article, we are going to discuss the positions on which Buffett increased his bets over the fourth quarter. Among his holdings these stocks are more likely to be undervalued.

Warren Buffett

Wells Fargo & Co (WFC): WFC is the third largest position of Buffett’s latest 13F portfolio. During the fourth quarter, Buffett boosted his WFC stakes by about 6%. As of December 31, 2011, Berkshire Hathaway had more than $10 billion invested in this position. WFC is a very popular stock among hedge funds tracked by us. At the end of the third quarter, there were 69 hedge funds with WFC positions in their 13F portfolios, including John Paulson’s Paulson & Co, Lee Ainslie’s Maverick Capital, and Ken Fisher’s Fisher Asset Management.

WFC reported strong fourth-quarter results. For the three months ending December 31, 2011, the company reported net income of $4.1 billion, or $0.73 per share, up from $3.4 billion, or $0.61 per share, for the same period in 2010. In addition to the impressive earnings growth, the company also has expanding profit margins and attractive valuation levels. WFC has a low forward P/E ratio of 8.61 and its EPS is expected to grow at an average of 9.6% per year for the next five years. So its P/E ratio for 2014 is 7.2. In fact, many other financial companies are also trading at low multiples. For example, Bank of America Corp (BAC) has a forward P/E ratio of 7.36 and Citigroup Inc (C)’s forward P/E ratio is 7.0.

DirecTV (DTV): Over the fourth quarter of 2011, Buffett significantly boosted his position in DTV by 379%. At the end of last year, his Berkshire Hathaway reported owning $870 million worth of DTV shares. At the end of September, there were 33 hedge funds disclosed to own DTV in their 13F portfolios. Roberto Mignone’s Bridger Management also had $82 million invested in this stock. We like DTV. It has a strong record of increasing earnings, solid financial position, and reasonable valuation levels. DTV has a low forward P/E ratio of 8.31 and it is expected to grow at 17.58% per year over the next five years. This indicates that DTV’s P/E ratio for 2014 is only about 6. The main competitors of DTV include Comcast Corporation (CMCSA) and Dish Network Corp (DISH). CMCSA’s 2014 P/E ratio is 10.5 and DISH’s is 9.2, both higher than that of DTV.

During the fourth quarter of 2011, Buffett also increased his positions in International Business Machines (IBM), Visa Inc (V), CVS Caremark Corp (CVS), and Intel Corp (INTC). We like his bets on technology stocks such as IBM and INTC. We think they are trading at discounts and have great potential to generate decent returns in the future. We like CVS too. It has a relatively low forward P/E ratio of 12.03 and it has a double-digit expected growth rate. We believe stocks are cheap at the moment and Buffett knows that too. Even stocks like Visa with high current P/E ratios are attractive picks. The premium you need to pay to buy these high growth companies is much lower than what it used to be. Visa’s 2014 P/E ratio is 11.6, versus 10.97 for Mastercard Inc (MA) and 9.3 for American Express Company (AXP).

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

Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

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!