At Insider Monkey, we track quarterly 13F filings from hundreds of hedge funds and other notable investors- including, of course, Warren Buffett’s Berkshire Hathaway. We’ve found that the information in these filings can be useful in developing investment strategies; for example, the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy). Some of Buffett’s largest holdings at this time are positions which he has bought most of over the last couple years, but for the most part he is a long term investor. Read on for our quick take on the five largest positions in Buffett’s most recent 13F portfolio which Berkshire had owned at least $1 billion of at the end of 2010 (or see the full list of the holding company’s stock picks over time).
For a long time, The Coca-Cola Company (NYSE:KO) has been one of Buffett’s favorite stocks, and a classic example of a consumer stock which persistently earns a large brand premium; one of Buffett’s contributions to value investing theory is that brand power should be given a good deal of weight compared to a stock’s quantitative value metrics. However, The Coca-Cola Company (NYSE:KO) currently trades at 22 times trailing earnings, so it does not look that attractive right now. The Bill and Melinda Gates Foundation Trust reported a position of over 34 million shares in its own 13F filing (check out more stocks the trust owns).
Buffett has maintained a stake of a little over 150 million shares in American Express Company (NYSE:AXP) over the past couple of years. American Express Company (NYSE:AXP) is growing slowly; in the second quarter of 2013, its revenue was up only 2% versus a year earlier with net income up 5%. With trailing and forward P/Es of 18 and 14 respectively, markets seem to pricing in an increase in earnings growth rates over the next few years. GAMCO Investors disclosed ownership of 3.7 million shares of the credit/debit card and travel services company at the end of Q1; that fund is managed by billionaire Mario Gabelli.
Berkshire Hathaway has also included The Procter & Gamble Company (NYSE:PG) as one of its top stock picks with the most recent filing reporting a position of about 53 million shares. Procter & Gamble is another company which is currently stable in terms of its financials, though with a valuation which incorporates some future improvements in earnings per share; for example, the forward P/E is 18. It is a potential defensive play with a beta of 0.3 and a dividend yield of 3%. Pershing Square, managed by billionaire Bill Ackman, is another major shareholder of Procter & Gamble (research more stocks Ackman likes).
Over the past couple years the holding company has increased what had already been a significant position in Wal-Mart Stores, Inc. (NYSE:WMT) to a total of about 49 million shares. In its most recent quarter sales and net income were up only 1% compared to the same period in the previous fiscal year, in what had been a troubling quarter for other big-box stores as well. The beta is low here as well (at 0.3) as would be expected for a discount retailer. Phil Gross and Robert Atchinson’s Adage Capital Management owned a little less than 3 million shares of Wal-Mart according to that hedge fund’s most recent filing.
Disclosure: I own no shares of any stocks mentioned in this article.
