Warren Buffett Slashes Wal-Mart (WMT), Kinder Morgan (KMI) Positions, Bullish on Airlines

Berkshire Hathaway is a holding company with diversified business interests. It is run by legendary investor Warren Buffett. The holding company follows the principles of value investing, propounded by Benjamin Graham. The company is also known for retaining its investments for a long period of time.

Consumer staple stocks form 37% of Berkshire Hathaway’s portfolio. It is followed closely by Finance stocks, contributing 32% of the portfolio. During September quarter, Berkshire Hathaway shuffled its portfolio to trim its positions in Wal-Mart Stores Inc. (NYSE:WMT) and Kinder Morgan Inc (NYSE:KMI), while it showed interest in aviation sector and initiated positions in Delta Air Lines Inc. (NYSE:DAL), United Continental Holdings Inc. (NYSE:UAL) and American Airlines Group Inc (NASDAQ:AAL).

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Wal-Mart Stores Inc. (NYSE:WMT) stock has advanced 17% this year so far and its dividend clocks in at a healthy 2.80%. The stock accounted for 0.73% of Berkshire Hathaway’s portfolio. For the quarter ended on 30th September, 2016, the investment fund slashed its holding of the stock by 67% to 12.97 million shares. Of the hedge funds in our database, 58 funds currently hold $6.86 billion worth of Wal-Mart Stores shares in their portfolio at the end of the June quarter, which equals to 3% of the outstanding shares. Hedge funds are watching the stock closely in case Donald Trump follows through with his protectionist campagin promises, a development that would not be good for Wal-Mart.

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Kinder Morgan Inc (NYSE:KMI) stock gained 53% in this year so far. However, Berkshire Hathaway trimmed its holding of the stock by 24% during the quarter ended on 30th September, 2016. The fund held $462 million worth of Kinder Morgan stock at the end of the quarter, forming 0.36% of its portfolio. Berkshire Hathaway  had 20 million shares of the company in its portfolio at the end of the period. Among the funds we track, 53 funds held $1.76 billion worth of  Kinder Morgan’s stock in aggregate at the end of June, having amassed 4.20% of its outstanding stock. The company is currently waiting for Canadian approval for doubling the capacity of its pipeline to the Pacific. The decision is to be delivered by December 19. Kinder Morgan is looking to build a second pipeline right next to the existing Trans Mountain line running from the Alberta oil sands to the west coast.

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Delta Air Lines Inc. (NYSE:DAL) stock forms 0.19% of Berkshire Hathaway’s portfolio at the end of September quarter. The fund held 6.33 million shares of the company with the market value of $249 million.  The number of funds from our hedge fund database long Delta Air Lines was at 94 in the quarter ending June. The total value of their holdings stood at $4.65 billion, in comparison to $6.93 billion held by 97 funds at the end of previous quarter. The aviation company announced pay raise for its eligible employees. The 7% increase in the pay will be effective from April, 2017. For knowing more about Warren Buffett’s investment philosophy, read our article here.

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United Continental Holdings Inc. (NYSE:UAL) stock gained 20% this year so far. Berkshire Hathaway initiated its position in the company during the September quarter by buying 4.53 million shares. The market value of the holding stands at $237 million and forms 0.18% of Berkshire Hathaway’s portfolio. 57 hedge funds from our database have positions in United Continental Holdings, with total holdings of about $2.52 billion as on the end of June quarter, amounting to about 18.30% of the company’s outstanding stock. The company announced deferring its $5 billion order to Boeing. United Continental Holdings stated that the decision has been taken to cut its costs. The company also said that it will convert orders for 61 Boeing 737-700 planes due to be delivered in the next two years into the newer 737 MAX model.

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American Airlines Group Inc (NASDAQ:AAL) stock climbed 10% this year as it also saw Berkshire Hathaway starting its position in the stock. The investment firm held 21.77 million shares of American Airlines Group worth $797 million as on the end of September quarter. 56 hedge funds we track held about $1.35 billion of American Airlines Group stock as on the end of June quarter, in comparison to 61 funds holding stock worth $3.37 billion the previous quarter. American Airlines Group recently updated its guidance for the fourth quarter. The company expects its total revenue per available seat miles in the fourth quarter of 2016 to decline between 0.5 and 2.5 percent on year over year basis. Its pre-tax margins are expected to be in the range of five to seven percent for the quarter.

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DISCLOSURE – NONE