Berkshire Hathaway (
two new portfolio managers
to build its eventual team of three which will complete its
succession plan for when founder
eventually retires (at an unknown date). Todd Combs, a hedge fund
manager, got the job in 2010 by applying for it for it and being
selected for an interview out of hundreds who responded to a
"help wanted" ad Buffett placed in 2007.
, who met Buffett by winning an auction to have lunch with him
and formerly ran hedge fund Peninsula Capital Advisors, was hired
in September 2011.
Buffett said in his shareholder letter: "When our quarterly
filings report relatively small holdings, these are not likely to
be buys I made but rather holdings denoting purchases by Todd or
The two managers have not had much time to prove themselves in
their new roles, but their recent stock picks' performance has
boded well for the future of Berkshire Hathaway. The top winners
of the new managers are: MasterCard (
), Visa (
) and CVS (
Berkshire bought 216,000 shares of MasterCard at an average price
of $243 in the first quarter of 2011 and 189,000 shares at an
average price of $274 in the second quarter of 2011. The
best-performing of the new managers' picks, MasterCard has gained
84% from the average purchase price, and 27% year to date.
MasterCard Inc. advances global commerce by providing a critical
economic link among financial institutions, businesses,
cardholders and merchants worldwide. MasterCard Inc. has a market
cap of $56.34 billion; its shares were traded at around $473.7
with a P/E ratio of 21.8 and P/S ratio of 8.4. The dividend yield
of MasterCard Inc. stocks is 0.3%.
MA's third-quarter net revenue increased 9% and net income
increased 17% year over year, as worldwide purchase volume during
the quarter increased 13% to $661 billion.
We are executing on strategic partnerships as demonstrated by our
recent announcement with Deutsche Telekom and the completion of
AliPay's integration with the DataCash payment platform, which
will expand AliPay's reach to online retailers outside of China.
We also continue to work with government entities around the
world, like the South African Social Security Agency, to help
them implement more efficient and secure ways to deliver social
benefits and to increase transparency and financial inclusion,"
said Ajay Banga, MasterCard president and CEO in a statement.
U.S. consumer spending climbed to close to a four-year high in
August, according to a Gallup poll, part of a generally improved
economic picture that month. Gallup's Job Creation Index rose to
19 in August from 17in July, and jobs gains in July beat
analysts' expectations, according to Automatic Data Processing,
though other factors have an effect, such as back-to-school
spending, according to Gallup.
August consumer confidence, though tied to a 2012 low and
declining since May, was significantly higher than a year ago,
MA on Thursday lowered the low end of its revenue guidance for
the second half of the year, due to uncertain global spending,
according to Fox Business.
Berkshire acquired 2,291,708 shares of Visa at an average price
of $87 in the third quarter of 2011, and increased the stake by
573,300 shares in the fourth quarter of 2011 at an average price
of $94. In the second quarter of 2012, they sold 785,349 shares
as the price rose to an average of $119. Visa performed
second-best of the new managers' buys, increasing 82% from the
average price paid, and 38% year to date. It trades on Friday for
a historical high $140.26 per share.
Visa operates the world's largest retail electronic payments
network and is one of the most recognized global financial
services brands. Visa has a market cap of $108.92 billion; its
shares were traded at around $140.15 with a P/E ratio of 22.7 and
P/S ratio of 11.9. The dividend yield of Visa stocks is 0.7%.
Visa had a third quarter net loss of $1.8 billion, due to $4.1
billion spent on litigation. Without the litigation provision and
related tax benefit, the adjusted net income was $1.1 billion, a
25% increase year over year. Payments volume grew 6% to $979
"Visa once again reported solid global growth in payments volume,
cross border transactions and processed transactions outside the
U.S., executing on our strategy of growing the electronification
of payments worldwide. We are pleased that we were able to come
to a resolution in the merchant litigation which was acceptable
to most parties while ensuring the long-term health of the U.S.
payments industry," said Joseph Saunders, chairman and chief
executive officer of Visa Inc. "As we look forward, we remain
focused on launching new payment solutions and products for our
financial and merchant partners and consumers, while supporting
the Visa brand and the advancement of electronic payments."
The company also during the quarter repurchased 4 million shares
at a cost of $461 million, and authorized a new $1 billion
Berkshire in the third quarter of 2011 purchased 5,661,000 shares
of CVS at an average price of $36, and in the fourth quarter
added 1,445,500 shares at an average price of $37. In the second
quarter of 2012 it sold 1,804,584 shares at an average price of
$45. The total position size at the end of the second quarter was
5,301,916. CVS's share price has increased 48% higher than the
average price paid, and 20% year to date.
CVS/Caremark is the nation's premier integrated pharmacy services
provider, combining one of the nation's pharmaceutical services
companies with the country's largest pharmacy chain.
CVS Caremark Corporation has a market cap of $61.61 billion; its
shares were traded at around $48.86 with a P/E ratio of 15.9 and
P/S ratio of 0.6. The dividend yield of CVS Caremark Corporation
stocks is 1.3%. CVS Caremark Corporation had an annual average
earnings growth of 15.7% over the past 10 years. GuruFocus rated
CVS Caremark Corporation
the business predictability rank of 4-star
CVS's third quarter net revenues increased 16.3% to a record
$30.7 billion, with pharmacy services up 28.2% and retail
pharmacy up 6.9%. Pharmacy services sales were up primarily due
to new clients starts associated with its successful 2012 selling
season, drug cost inflation and new activity resulting from its
April 2011 acquisition of the Medicare prescription drug plan of
Universal American Corp.
Retail pharmacy segment sales increased benefited from Walgreens
not being part of the Express Scripts pharmacy provider in the
quarter, and pharmacy prescription volumes which rose 7.7%.
The company raised and narrowed its full-year 2012 guidance due
to strong year-to-date performance and outlook, with an
anticipated benefit of approximately $0.05 per share in its
prescription business due to the contractual problems between
Walgreens and Express Scripts. The new anticipated range is $3.09
to $3.15 per share, up from the previously expected $3.01 to
Other of Weschler and Combs' picks have done well. DirecTV (
) is up 16% from the average purchase price and 24% year to date;
) is up 34% from the average purchase price and 16% year to date;
and General Dynamics is up 5% from its average purchase price and
1.2% year to date.
See Berkshire Hathaway's portfolio here. Also check out the
Undervalued Stocks, Top Growth Companies and High Yield stocks of
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