Why Should You Avoid Warren Buffett’s Mid-Cap Picks

Chicago Bridge & Iron Company N.V. (NYSE:CBI) represents the third-largest mid-cap position in Berkshire Hathaway’s equity portfolio. Mr. Buffett holds 10.70 million shares of the company valued at $449.23 million. The stock of the engineering and construction company lost 45% in the last 52 weeks. The decline comes after a short-seller Prescience Point issued a report questioning Chicago Bridge & Iron Company N.V. (NYSE:CBI)’s accounting methodology applied during its acquisition of Shaw Group in 2012. Moreover, the decline was also supported by the fall of oil prices as the company is considered to have a lot of exposure to upstream oil production. Nevertheless, Mr. Buffett remained bullish on the company and so did David Einhorn of Greenlight Capital, who initiated a stake during the last three months of 2014. Greenlight reported holding 2.94 million shares of Chicago Bridge & Iron Company N.V. (NYSE:CBI) in its latest 13F filing, being the second-largest shareholder among funds that we track.

Then there is WABCO Holdings Inc. (NYSE:WBC), in which Berkshire Hathaway owns 4.08 million shares, valued at $427.11 million. WABCO is engaged in the development and sale of stability, suspension, and transmission automation and air management control systems for commercial vehicles. Am0ng other billionaire investors that are invested in WABCO Holdings Inc. (NYSE:WBC) is Ken Griffin of Citadel Investment Group. During the last three months of 2014, Citadel cut its stake by 30% to 405,400 shares. On the other hand, Israel Englander of Millennium Management seems to be optimistic about WABCO Holdings’ prospects as Millenium surged its position by 4,400% to 101,200 shares. However, in the equity portfolio of all three funds the position in WABCO Holdings Inc. (NYSE:WBC) represents less than 1% of the total portfolio value.

The fifth-largest stake is represented by a $344.18 million position in Torchmark Corporation (NYSE:TMK). Berkshire reported holding 6.35 million shares in its most recent 13F filing, the position remaining unchanged for at least last three years. Torchmark positions itself as a low-cost provider of health and life insurance. The company’s stock has had a volatile year and only gained  around 3% during the last 52 weeks. On the other hand, Torchmark Corporation (NYSE:TMK) posted top and bottom line growth in the last several years. Among other shareholders of the company are David Harding’s Winton Capital Management and Ken Griffin’s Citadel Investment Group, which held 1.34 million shares and 810,200 shares respectively.

Disclosure: None