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Tracking Warren Buffett's Berkshire Hathaway Portfolio – Q4 2017 Update
February 15, 2018 6:07 pm|Comments (0)

This article is part of a series that provides an ongoing analysis of the changes made to Berkshire Hathaway’s US stock portfolio on a quarterly basis. It is based on Warren Buffett’s regulatory 13F Form filed on 02/14/2018. Please visit our Tracking 10 Years Of Berkshire Hathaway’s Investment Portfolio article series for an idea on how his holdings have progressed over the years and our previous update for the moves in Q3 2017.

During Q4 2017, Berkshire Hathaway’s (BRK.A, BRK.B) US long stock portfolio value increased ~8%, from $ 178B to $ 191B. The top five positions account for ~62% of the portfolio: Apple Inc. (NASDAQ:AAPL), Wells Fargo (NYSE:WFC), Kraft Heinz Co. (NASDAQ:KHC), Bank of America (NYSE:BAC), and Coca-Cola (NYSE:KO). There are 45 individual stock positions, many of which are minutely small compared to the overall size of the portfolio.

Warren Buffett’s writings (pdfs here) are a treasure trove of information and are a very good source for anyone starting out on individual investing.

New Stakes

Teva Pharmaceuticals (NYSE:TEVA): TEVA is a very small 0.19% of the portfolio stake established this quarter at prices between $ 11.20 and $ 19.33, and the stock currently trades at $ 19.33.

Stake Disposals

None.

Stake Increases

Apple Inc.: AAPL is now the largest 13F portfolio stake at 14.63%. It was established in Q1 2016 at prices between $ 93 and $ 110, and increased by ~55% the following quarter at prices between $ 90 and $ 112. Q4 2016 saw another ~275% increase at prices between $ 106 and $ 118, and that was followed with a stake doubling in January 2017 at prices between $ 116 and $ 122. There was another ~23% increase this quarter at prices between $ 154 and $ 176. The stock currently trades at $ 167.

US Bancorp (NYSE:USB): The 2.44% USB stake has been in the portfolio since 2006. The original position was tripled during the 2007-2009 time frame. It was then kept relatively steady till Q2 2013, when ~17M shares were purchased at prices between $ 32 and $ 36. The last significant activity was a ~5% increase in Q1 2015 at prices between $ 41 and $ 45. Berkshire’s cost basis on USB is ~$ 32, and the stock is now at $ 55.31. There was a marginal increase this quarter.

Bank of New York Mellon Corp. (NYSE:BK): BK is a 1.71% of the 13F portfolio stake. The bulk of the original position was purchased in Q2 2012 at prices between $ 19.50 and $ 25. The stake was increased by 30% in Q2 2013 at prices between $ 26.50 and $ 30.50. The five quarters through Q3 2015 had seen an about-turn, as there was a combined ~20% reduction at prices between $ 36 and $ 45. Q1 2017 saw a ~50% increase at prices between $ 43.50 and $ 49, and that was followed with another similar increase the following quarter at prices between $ 46 and $ 51. There was a ~20% further increase this quarter at prices between $ 51 and $ 55. The stock currently trades at $ 55.98.

Monsanto Company (NYSE:MON): The 0.71% MON position was established in Q4 2016 at prices between $ 98 and $ 106, and the stock currently trades at $ 120. In September 2016, Bayer AG (OTCPK:BAYRY) agreed to acquire Monsanto in a $ 128 per share cash deal. The last two quarters have seen a combined ~46% stake increase at prices between $ 115 and $ 122.

Stake Decreases

Wells Fargo & Co.: WFC is Buffett’s second-largest stake at 14.54% of the US long portfolio. In recent activity, around 9M shares were sold in Q2 2017 at around $ 53 per share to bring the ownership stake below the 10% threshold. The stock currently trades at $ 59.55. Berkshire’s cost basis is at ~$ 25.50. The last two quarters have seen marginal trimming.

American Airlines (NASDAQ:AAL): AAL stake was first purchased in Q3 2016. The position is now at 1.25% of the portfolio. The original purchase was at prices between $ 28 and $ 39 and doubled in Q4 2016 at prices between $ 36.50 and $ 50. The stock is now at $ 51.07. There was a ~2% trimming this quarter.

Note: Berkshire controls 9.6% of AAL.

General Motors (NYSE:GM): GM is a ~1% of the 13F portfolio position that was first purchased in Q1 2012 at prices between $ 21 and $ 30. The stake was increased by 60% in Q2 2013 at prices between $ 27.50 and $ 35. There was a ~20% increase in Q3 2014 at prices between $ 32 and $ 38, and a similar increase in Q3 2015 at prices between $ 27 and $ 33.50. Q2 2017 saw another 20% increase at prices between $ 32.50 and $ 35.50. There was an about-turn this quarter: a ~17% selling at prices between $ 40.50 and $ 46.50. The stock currently trades at $ 41.81.

International Business Machines (NYSE:IBM): The original IBM position was purchased in Q3 2011 at prices between $ 158 and $ 185. As of Q4 2016, the share count had gone up by almost 40% through periodic purchases. There was an about-turn in Q1 2017: a ~21% selling at prices between $ 166 and $ 182, and that was followed with another ~16% reduction in early May at prices between $ 150 and $ 160. Last quarter saw another one-third reduction at prices between $ 140 and $ 156. The remaining position was almost sold out this quarter at prices between $ 145 and $ 162. The stock currently trades at ~$ 155.

Note: Berkshire’s cost basis on IBM was ~$ 170 per share.

Sanofi (NYSE:SNY): The minutely small 0.09% of the portfolio stake in SNY saw marginal trimming this quarter.

Note: Per the annual report, Berkshire has a $ 1.7B position in Sanofi – so in addition to the ADRs listed in the 13F report, Berkshire also owns Sanofi securities listed in Euronext Paris.

Kept Steady

Kraft Heinz Co.: KHC is currently the third-largest 13F stock position at 13.24% of the portfolio. Kraft Heinz started trading in July 2015, with Berkshire owning just over 325M shares (~27% of the business). The stake came about as a result of two transactions with 3G Capital as partner: a ~$ 4B net investment in 2013 for half of Heinz, and a ~$ 5B investment for the acquisition of Kraft Foods Group earlier this year. Berkshire’s cost basis on KHC is below $ 30 per share, compared to the current price of $ 71.92.

Bank of America: Berkshire established this large (top-five) 10.48% of the portfolio position through the exercise of Bank of America warrants. The warrants had a strike price of $ 7.14, compared to the current price of $ 32. The cost to exercise was $ 5B, and it was funded using the $ 5B in 6% preferred stock they held.

Note: Berkshire’s ownership stake in Bank of America is ~6.5%.

American Express (NYSE:AXP) and Coca-Cola: These two very large stakes were kept steady during the last ~4 years. Buffett has said these positions will be held “permanently”. Berkshire’s cost basis on AXP and KO are at around $ 8.49 and $ 3.25 respectively, and the ownership stakes are at ~17.5% and ~9.4% respectively.

Phillips 66 (NYSE:PSX): PSX is a fairly large 4.27% of the portfolio stake. It is a long-term position. As of Q4 2014, the stake was very small at ~0.5% of the portfolio (~6.5M shares). Q1 2015 saw a ~14% increase at prices between $ 59 and $ 80. The following quarter saw an additional ~300% increase at prices between $ 76.50 and $ 82, and that was followed with a stake doubling in Q3 2015 at prices between $ 70.50 and $ 84.50. Q2 2016 saw another ~23% increase in the high $ 70s price range. The stock currently trades at $ 93.33. Berkshire’s cost basis is $ 78.31.

Note 1: Earlier this week, it was disclosed that Phillips 66 agreed to repurchase 35M shares from Berkshire at $ 93.725 per share. Berkshire indicated the transaction’s sole purpose was to eliminate additional regulatory requirements that come with ownership stake above 10%.

Note 2: Berkshire avoided disclosing PSX stake in the original Q2 2015 13F by making use of the “Section 13(f) Confidential Treatment Requests”. An amendment filed on 9/4/2015 disclosed the huge stake build-up. Berkshire controlled ~16% of PSX at the time.

Moody’s Inc. (NYSE:MCO): MCO is a 1.90% of the US long portfolio stake. It is a very long-term position, and Buffett’s cost basis is $ 10.05. The stock currently trades at ~$ 164. Berkshire controls 11.5% of the business.

Southwest Airlines (NYSE:LUV): LUV is a 1.63% portfolio stake purchased in Q4 2016 at prices between $ 38.50 and $ 51 and increased by ~10% in the following quarter at prices between $ 49.50 and $ 59. The stock is now at $ 57.73.

Note: Berkshire owns ~7.9% of LUV.

Delta Air Lines (NYSE:DAL): DAL was a very small 0.19% position in Q3 2016. The stake saw a whopping ~850% increase in Q4 2016 at prices between $ 39 and $ 52. The stock currently trades at $ 52.20, and the stake is now at 1.56% of the portfolio. There was a ~12% trimming during H1 2017.

Note: Berkshire controls ~7.3% of DAL.

Charter Communications (NASDAQ:CHTR): CHTR is a 1.49% of the US long portfolio position. It was established in Q2 2014 at prices between $ 118 and $ 158 and more than doubled the following quarter at prices between $ 151 and $ 164. Q4 2014 saw a further ~25% increase at prices between $ 140 and $ 170. In Q2 2015, the position was again increased by ~42% at prices between $ 168 and $ 193, and that was followed with another ~21% increase the following quarter at prices between $ 167 and $ 195. Q2 2016 saw a ~10% trimming at prices between $ 198 and $ 233. The stock currently trades at $ 359, compared to Berkshire’s cost basis of around $ 160. There was a ~10% trimming last quarter.

Note: Berkshire controls ~3.4% of CHTR.

Goldman Sachs (NYSE:GS): GS is a 1.46% of the US long portfolio stake established in Q4 2013. Berkshire Hathaway received $ 5B worth of warrants to buy GS stock during the financial crisis (October 2008) at a strike price of $ 115 (43.5M shares) that was to expire October 1, 2013. Buffett exercised the right before expiry to start this long position. Q3 2015 saw a ~13% reduction at prices between $ 172 and $ 213. It currently trades at ~$ 263.

DaVita Inc. (NYSE:DVA): DVA is a 1.29% of the US long portfolio position that was aggressively built up over several quarters: the original stake was doubled in Q1 2012, increased by over 50% in Q2 2012, 24% in Q4 2012, and an additional 16% in Q1 2013. There has been marginal buying since. The bulk of the stake build-up happened at prices between $ 30 and $ 49. The stock currently trades at $ 74.75, compared to Berkshire’s overall cost basis of $ 45.33.

Note 1: Berkshire’s ownership stake in DVA crossed the 20% ownership threshold last quarter as a result of buybacks at DaVita.

Note 2: In May 2013, Berkshire’s Ted Weschler signed an accord with DVA, limiting open market purchases to 25% of the company.

United Continental Holdings (NYSE:UAL): A minutely small 0.18% UAL position as of Q3 2016 saw a huge ~540% increase in Q4 2016 at prices between $ 52.50 and $ 76. It currently goes for $ 65.68. The stake is at ~1% of the portfolio.

Note: Berkshire controls ~9.3% of UAL.

Liberty SiriusXM Group (LSXMA, LSXMK): The tracking stock was acquired as a result of Liberty Media’s recapitalization in April 2016. Shareholders received 1 share of Liberty SiriusXM Group, 0.25 share of Liberty Media Group, and 0.1 share of Liberty Braves Group for each share held. Berkshire held 30M shares of Liberty Media, for which he received the same amount of Liberty SiriusXM Group shares. There was a ~40% stake increase in Q2 2017 at a cost basis of ~$ 40 per share. The stock is now at $ 41.77.

Note: LSXMA/LSXMK is trading at a significant NAV discount to the parent Sirius Holdings’ (NASDAQ:SIRI) valuation. For investors attempting to follow Buffett, LSXMA/LSXMK is a good option to consider for further research.

USG Corporation (NYSE:USG): USG is a very long-term holding, and there was a significant 21.39M share stake increase in Q4 2013 due to conversion of notes at $ 11.40 per share – Berkshire acquired the convertible notes during the financial crisis (2/2009), and USG opted to redeem them on 12/16/2013. Q2 2014 saw a ~12% stake increase at prices between $ 30 and $ 33. The stock currently trades at $ 33.88. Buffett controls around 27% of the business, and his cost basis is ~$ 19.

Verisign Inc. (NASDAQ:VRSN): VRSN was first purchased in Q4 2012 at prices between $ 34 and $ 49.50. The position was more than doubled in Q1 2013 at prices between $ 38 and $ 48. The following quarter saw a one-third increase at prices between $ 44 and $ 49. Q1 and Q2 2014 also saw a combined ~17% increase at prices between $ 47 and $ 63. The stock currently trades at $ 114, and the position is at 0.78% of the portfolio (~10% of the business).

Liberty Global PLC (LBTYA, LBTYK): The position was established in Q4 2013 at prices between $ 37.50 and $ 44.50 (adjusted for the 03/2014 stock split) and increased significantly in the following two quarters at prices between $ 38.50 and $ 46. The three quarters through Q1 2016 had also seen a combined ~30% increase at prices between $ 30 and $ 50. Q2 2016 saw a ~17% further increase at prices between $ 27 and $ 39. The stock is now at $ 34.92, and the stake is at 0.51% of the 13F portfolio.

Note: Berkshire controls 7.9% of Liberty Global.

Sirius XM Holdings: The 0.39% SIRI stake was purchased in Q4 2016 at prices between $ 4.08 and $ 4.61. Q2 2017 saw selling: a ~20% reduction at prices between $ 4.70 and $ 5.50. The stock is currently at $ 6.09.

Synchrony Financial (NYSE:SYF): SYF is a 0.42% of the portfolio position purchased in Q2 2017 at prices between $ 26.50 and $ 34.50 and increased by ~20% last quarter at prices between $ 28.50 and $ 31.25. The stock is now at $ 36.70.

Note: Synchrony is the private-label credit card business spin-off from GE that started trading in August 2014 at ~$ 23 per share. It has seen recent super-investor interest – Baupost Group has a ~10% portfolio stake.

Axalta Coating Systems (NYSE:AXTA): AXTA is a small 0.39% of the portfolio stake established in Q2 2015 at prices between $ 28 and $ 36 and increased by ~16% the following quarter at prices between $ 24.50 and $ 33.50. The stock currently trades at $ 30.84. Berkshire owns ~9.8% of the business.

Restaurant Brands International (NYSE:QSR): QSR is a 0.27% of the 13F portfolio position established in Q4 2014 at prices between $ 35 and $ 42. The stock currently trades well above that range at $ 57.71. It started trading in December 2014 following a merger/rename transaction between Tim Hortons and Burger King Worldwide.

Note: Berkshire’s stake in the business is ~4.2%.

Store Capital (NYSE:STOR): The 0.25% STOR stake was established in Q2 2017 in a private placement transaction at $ 20.25 per share. The stock is now at $ 23.41.

Costco Wholesale (NASDAQ:COST), Graham Holdings (NYSE:GHC), Johnson & Johnson (NYSE:JNJ), Liberty LiLAC Group (LILA, LILAK), Mondelez International (NASDAQ:MDLZ), M&T Bank (NYSE:MTB), MasterCard Inc. (NYSE:MA), Procter & Gamble (NYSE:PG), Torchmark Corporation (NYSE:TMK), United Parcel Service (NYSE:UPS), Verisk Analytics (NASDAQ:VRSK), Verizon Communications (NYSE:VZ), Visa Inc. (NYSE:V), and Wal-Mart Stores (NYSE:WMT): These are very small positions (less than ~0.5% of the portfolio each) kept steady this quarter.

Note: Since November 2015, Warren Buffett is known to own ~8% of Seritage Growth Properties (NYSE:SRG) at a cost basis of $ 36.50 in his personal portfolio. It currently trades at $ 38.96. SRG is a REIT spin-off from Sears Holdings (NASDAQ:SHLD) that started trading in July 2015.

The spreadsheet below highlights changes to Berkshire Hathaway’s US stock holdings in Q4 2017:

Warren Buffett - Berkshire Hathaway - Q4 2017 13F Report

Disclosure: I am/we are long BAC, GM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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