Warren Buffett’s Berkshire Hathaway filed its 13F for the third quarter of the year in November, disclosing many of its long equity positions from the end of September. Sometimes these filings aren’t entirely representative of what a hedge fund or other notable investor currently owns, because of the delay, but because of Berkshire’s longer-term perspective and larger size we think that they are a fairly good representation of where Buffett’s money is right now. It’s also possible to consider the top stocks in different sectors and take a brief look at them to see if they might be good values for other investors. Read on for our quick take on five of the largest Berkshire holdings in the services sector or see the full list of Buffett’s stock picks.
The top services pick was discount retailer Wal-Mart Stores, Inc. (NYSE:WMT), as Berkshire reported owning 47 million shares. Wal-Mart’s most recent fiscal quarter ended in October, with the company reporting a 9% increase in earnings compared to the same period in the previous fiscal year. Considering its size ($230 billion market cap) and its trailing earnings multiple of 14, as well as the fact that it’s fairly well protected from a bear market, Wal-Mart looks like a good value. However, it might not be as good a buy as dollar stores. Cliff Asness’s AQR Capital Management was another major holder of Wal-Mart during the third quarter (check out Cliff Asness’s favorite stocks).
Television entertainment provider DIRECTV (NASDAQ:DTV) was another of Berkshire’s top ten stock picks with a position of 30 million shares. DirecTV trades at 12 times trailing earnings, and revenue and net income were both up last quarter versus a year earlier. Wall Street analysts expect continued growth, with a forward P/E of 10 and a five-year PEG ratio of 0.7. Renaissance Technologies, founded by billionaire Jim Simons, increased its own stake by 66% between July and September (find more stocks Renaissance was buying). We think it’s worth it to take a closer look at the company.