In this instance, Warren is Warren Buffett, the world's best stock picker, one of the richest people on the planet. He owns a great deal of Berkshire Hathaway, a holding company with many other companies in its portfolio. He's a legend in his own time, a well-deserved legend.
With all the major market turmoil, most investors would love to sit down with Mr. Buffett and ask him many questions. That's not possible, though you can bid on an annual lunch with the Oracle of Omaha. The last person to pay for such a privilege ate for $2.6 million. You and I are probably not going to be dining with Mr. Buffett. The main queston most of us want to know: What is Mr. Buffett doing in these difficult times?
The answer, thankfully, is given every quarter. It's the report his company files with the SEC that shows his holdings and those of Berkshire Hathaway. This is what he's doing:
Buying: Dollar General (DG-NYSE) This is a new position. There were 1,497,800 shares added to the portfolio. Dollar General is a discount retailer of general merchandise with stores mostly in the southern, southwestern, midwestern and eastern U.S.
Mastercard (MA-NYSE) These shares almost doubled to 405,000, up from 216,000 in the last quarter. Mastercard processes credit card payments and is paid a fee for doing it.
Verisk Analytics, Inc. (VRSK-NASDAQ) This is a new position totaling 2,101,125 shares. The company provides proprietary data, analytics methods, and embedded decision support solutions to property and casualty (P&C) insurance, mortgage, and healthcare industries primarily in the United States. One of the largest parts of Berkshire Hathaway is Property & Casualty insurance.
Selling: Kraft Foods (KFT-NYSE) Mr. Buffett voiced some concerns about Kraft buying Cadbury. He did more than talk. He sold about 6 million shares in the last quarter, taking his position to 99,467,624 shares from 105,210,000 shares.
Positions that were unchanged:
American Express (AXP); Bank of New York Mellon (BK); Coca Cola (KO); Comdisco Holdings (CDCO-NASDAQ); ConocoPhillips (COP-NYSE); Costco Wholesale (COST-NASDAQ); Exxon Mobil (XOM-NYSE);Gannett co. (GCI-NYSE); General Electric Corp.(GE-NYSE); GlaxoSmithKline (GSK-NYSE); Ingersoll-Rand (IR-NYSE); Johnson & Johnson (JNJ-NYSE); Lubrizol (LZ-NYSE); M&T Bank Corp. (MTB-NYSE); Moody's Corp. (MCO-NYSE); Procter & Gamble (PG-NYSE); Sanofi-Aventis (SNY-NYSE); Torchmark (TMK-NYSE); US Bancorp (USB-NYSE); USG Corp. (USG-NYSE); United Parcel Service (UPS-NYSE); Wal-Mart Stores Inc. (WMT-NYSE).
Most of these positions (with the exceptions of the 2 new ones) have been owned for decades. Notice they are all very large companies, mostly highly recognizable names. Mr. Buffett likes to buy stocks which he describes as having a "moat". In his lexicon, that means the company has a strong brand or patents that make it almost unassailable by competitors. A great example is Coca-Cola, a stock he's owned for many years. As he once said: my favorite holding period is forever.
What would Warren do? It's easily answered from looking at his actions. He would buy stocks that he sees as attractive, even in very bad markets. And he wouldn't sell unless he had a specific reason. The strategy has worked wonders for him. Probably work well for all of us.
- Ted Allrich
August 16, 2011