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Billionaire Warren Buffett’s Big Changes: Johnson & Johnson (JNJ), General Motors Company (GM), Archer Daniels Midland Company (ADM)

From a valuation standpoint, DirecTV trades cheaply when compared to major competitor DISH Network Corp. (NASDAQ:DISH).


Price to Earnings

DirecTV 8.5

Dish Network 14


Price to Cash Flow

DirecTV 6

Dish Network 10

DirecTV is another “growth at a reasonable price” opportunity that Buffett is invested in; the satellite company trades at a 0.7 PEG.

Buffett’s new additions…
Buffett bought 3.68 million shares of Verisign, Inc. (NASDAQ:VRSN) during the fourth quarter, making it Berkshire’s 32nd largest position. The company provides Internet infrastructure services to companies, and recently got its agreement with Internet Corporation for Assigned Names and Numbers approved. This will allow Verisign to serve as the authoritative registry operator for the .com registry through 2018.

One big advantage for this tech company is its healthy cash position. At the end of 2012, the company had $1.5 billion in cash, versus debt of only $700 million. VeriSign has also managed to boost its operating margins of late. Its five year average operating margin is 38%, whereas its trailing-12-month operating margin is 52%.

Another addition to the Berkshire portfolio was Archer Daniels Midland Company (NYSE:ADM), with the firm buying 5.95 million shares and putting the company as its 31st largest holding.

Archer Daniels Midland Company (NYSE:ADM) has a relatively diverse revenue portfolio, generating 50% from agricultural services related to grain elevator and transportation networks, then 35% from oil seeds processing that’s engaged in the processing of soybeans and others. Its other segment, corn processing, makes up just over 10% of revenues and produces products for the food and beverage industries.

Archer Daniels Midland Company (NYSE:ADM) also has a solid dividend yield, at 2.3%. The company has paid a dividend for 325 successive quarters, and increased its dividend every year since 2002. Another notable billionaire, Stephen Mandel of Lone Pine Capital, was also betting on Archer during the fourth quarter, owning over four times as many shares as Buffett (see all the hedge funds owning Archer).

Given Warren Buffett’s superior track record, it’s worthwhile taking a look at what he was loading up on during the fourth quarter. His new additions, VeriSign and Archer Daniels, appear to be solid investments for 2013 with robust growth prospects. Johnson & Johnson still has a number of headwinds related to recalls and production suspensions, but Buffett’s other additions, GM and DirecTV, are both opportunities for growth at a reasonable price.

The article Billionaire Warren Buffett’s Big Changes originally appeared on Fool.com and is written by Marshall Hargrave.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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