Berkshire’s Fourth-Quarter Portfolio Changes


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By Greggory Warren, Morningstar,

Wide-moat  Berkshire Hathaway‘s (BRK.B) fourth-quarter 13-F filing, which details the firm’s equity holdings at the end of the December quarter, held few surprises, with the biggest changes coming from transactions entered into during the 2008-09 financial crisis.

In the fourth quarter, Berkshire not only exercised the warrants it received from  General Electric (GE) and  Goldman Sachs (GS) as part of capital infusions made during the crisis, receiving 10.7 million shares of GE and 13.1 million shares of Goldman in the process, the insurer also more than doubled its stake in  USG (USG) after that firm redeemed convertible debt issued to Berkshire in early 2009.

As for the actual purchases made during the quarter, Warren Buffett and his two lieutenants–Ted Weschler and Todd Comb–put additional capital to work in  DaVita (DVA),  ExxonMobil (XOM),  Wal-Mart (WMT),  Wells Fargo (WFC), and  US Bancorp (USB), and made a new-money purchase in Liberty Global PLC. This was likely a replacement for  DISH Network (DISH), which was completely removed from  portfolio (after running up close to 60% in value last year). Berkshire also eliminated its stake in  GlaxoSmithKline (GSK), finishing off the job it had started in the third quarter of 2013 (when the firm reduced its stake in the health-care company by 75%). Other notable sales during the fourth quarter included  Suncor Energy (SU), Starz (STRZA),  ConocoPhillips (COP), Liberty Media (LMCA), and  Moody’s (MCO).

It should also be noted that Berkshire continues to think outside of the box when it comes to eliminating legacy holdings. At the end of December, the insurer announced that it was swapping around 19 million shares of  Phillips 66 (PSX) it already owns for Phillips Specialty Products (likely avoiding capital gains taxes in the process). The firm is also looking at a similarly structured deal with Graham Holdings (formerly Washington Post), swapping its 1.7 million shares (with a cost basis of less than $11 million) for one or more of the businesses left in Graham’s portfolio (equivalent to Berkshire’s current $1.1 billion stake).

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