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sagitarius84 (50.44)

Buffett's Berkshire Hathaway’s portfolio holdings for 2Q 2009



August 16, 2009 – Comments (3) | RELATED TICKERS: BRK-A , BRK-B , JNJ

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Berkshire Hathaway (BRK-B) just posted its 13-F filing with the SEC, which lists changes in its stock positions.

Buffett initiated a new position in medical technology company Becton Dickinson (BDX) in the second quarter. The sec filing shows Berkshire Hathaway purchased.1.20 million shares in Becton Dickinson (BDX). Becton Dickinson is a dividend aristocrat, which has raised distributions for 36 years in a row.

Berkshire added 4.4 million shares to its position in health care giant Johnson & Johnson (JNJ). This is the second consecutive addition to its holdings there. Johnson and Johnson (JNJ) is another dividend aristocrat, which has rewarded shareholders with 47 years of consecutive dividend increases. Check my analysis of the stock.

Those recent moves by Buffett reiterate my convictions that he is a closet dividend investor. Most companies that have managed to increase their dividends for long periods of time are ones that have wide moats as well as excellent competitive advantages in the marketplace. Having these qualities leads to rising earnings which tend to support a steady pace of increase in dividends.

Berkshire eliminated its position in utility company Constellation Energy (CEG). This wasn’t a surprising move since Buffett’s company had already disclosed this sale in a June 1 filing.

Berkshire Hathaway disclosed lowered stakes in Carmax (KMX), ConocoPhillips (COP), Eaton Corporation (ETN), Home Depot (HD), United Health Group (UNH) when comparing June 30 to March 31 filings.

In a July 22 filing Berkshire Disclosed it had also cut its stake in the credit rating company Moody’s (MCO) by 16%.

Over the past several months Berkshire Hathaway has been allocating funds to preferred stocks with at very good prices. The company has invested billions in preferred shares of companies like Goldman Sachs (GS), General Electric (GE), Tiffany’s (TIF), Harley Davidson (HOG) and Dow Chemical (DOW). Some of these deals deliver not only solid yields in the low double digits, but also give warrants which could provide solid capital gains if these stocks recover over the next few years.

What this filing does not show however is the fact that Buffett’s conglomerate “goofed on derivatives”. While there may be more buzz than actual news and the SEC issues have been resolved, it is interesting how Buffett talks one thing but then does exactly the opposite of what he preaches. He’s always held a view against derivatives, yet his company has always engaged in options selling, futures and insurance derivatives.

One of his riskiest trades is the selling of puts on four major world stock indices, which expire somewhere between 2018 and 2028. Berkshire assumed over $37.50 billion in potential liabilities in the process, and has already lost $8 billion on them at the end June 2009. If world stock markets resemble the Japanese stock market of the second “lost decade” for the country with the rising sun, then Berkshire would be on the hook for almost half the $37 billion in assumed liabilities.

Does is pay to follow Buffett’s moves? The answer is yes it does. According to this paper a portfolio that mimicked Buffet’s stock investments would have outperformed S&P 500 by 14.6% annually between 1976 and 2006. You could find the list of Berkshire Hathaway’s portfolio holdings as of June 30, 2009 here.

3 Comments – Post Your Own

#1) On August 16, 2009 at 11:20 AM, sagitarius84 (50.44) wrote:

What is your opinion on Buffett's latest moves?

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#2) On August 16, 2009 at 1:45 PM, RonChapmanJr (29.94) wrote:

Buffett is about done.  It is time for investors to find a new role model.

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#3) On August 16, 2009 at 2:14 PM, eddietheinvestor (< 20) wrote:

Buffet made a big mistake, I believe, in reducing his position in Conoco Phillips--after the big loss.  Since Buffet reduced his position in COP, the stock has gone way up.  Maybe he gave up on them too soon.  And doesn't Buffet say that if a stock is a good buy, after it goes down, it can be a better buy?

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