The surprise winner so far in 2012 after the first month is USG Corporation (NYSE: USG). then there are stocks like Bank of America Corporation (NYSE: BAC), Ingersoll-Rand plc (NYSE: IR), Moody’s Corporation (NYSE: MCO), Intel Corporation (NASDAQ: INTC), Wells Fargo & Co. (NYSE: WFC), and American Express Co. (NYSE: AXP).  Yep, the other winners of these seven holdings are mostly tied to finance.

We have evaluated the performance to date (from FinViz.com) and added in some color on each.  We have also shown how the price compares to the 52-week highs or to the consensus price target as well, and included in some cases whether the position is substantial or not.

USG Corporation (NYSE: USG) is up 32.8% year-to-date and is actually Berkshire Hathaway’s top performing stock.  With so much interest in the bottoming out of housing at some point in 2012, it may not be that ridiculous even if the fundamentals have not changed all that much yet.  The concern here is that at $13.50 it now trades above the consensus $13.30 price target.  Buffett holds over 17 million USG shares.

Bank of America Corporation (NYSE: BAC) is up 32.4% year-to-date and the new large preferred position is back to where Warren Buffett doesn’t look foolish for dreaming up his investment in BofA while in the bath.  At $7.36 there is still plenty of upside to the $8.90 price target and this remains (and is expected to remain) well under book value.

Ingersoll-Rand plc (NYSE: IR) is up 15.5% year-to-date, not bad for what is usually a slower-moving company with a portfolio of industrial and commercial products.  At $35.18, it does not have much upside left to the consensus price target of $37.94 but it is still way off the 52-week high of $52.33.  Buffett’s position is way down from prior periods and is only 636,600 shares as of the last report.  This position just can’t move the entire Berkshire Hathaway Barometer too much.

Moody’s Corporation (NYSE: MCO) is up 11.6% year-to-date.  The credit rating agency has been a controversial position that Buffett has lightened up on through time.  At $37.60, it is close to the consensus price target of $39.60 and under the 52-week high of $41.93.  Buffett did lighten up a bit on this position but still holds roughly 28.4 million shares.

Intel Corporation (NASDAQ: INTC) is up 9.5% year-to-date and is one of the news 2011 investments that Mr. Buffett hid.  It was also his first technology pick as far as pure hardware is concerned.  At $26.55, Intel is very close to its 52-week high of $27.00 and close to its consensus analyst price target of $27.17.

Wells Fargo & Co. (NYSE: WFC) is up 8.9% year-to-date and is up the least of the big money-center banks.  It is also the only one of the money-center banks trading above book value because the restructuring regulatory climate over future earnings will create the least amount of change at Wells Fargo. Buffett keeps adding here and now holds over 361 million shares as one of his biggest positions ever.

American Express Co. (NYSE: AXP) is up 7.7% year-to-date, which is lower than many financials. The recent earnings report showed improvement but perhaps a trend towards peaking of the improving credit metrics of AmEx customers.  Buffett’s position is roughly 151.6 million shares.

Berkshire Hathaway’s most recent holdings in entirety can be found here.

If you enjoyed the top analyst calls, you can sign up in the box below to join our morning email list to receive news directly in your inbox each morning. We include major analyst upgrades and downgrades, IPO and M&A news, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

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Uncertainty in Europe

The sovereign debt crisis in Europe, which appeared to be largely solved last week, apparently is not. Moody’s reported today that it may still downgrade the debts of some major nations in the region. The grand plan set by EU leaders is still short on details. The money added to a new fund will be inadequate to cover a default of Italy’s national obligations. Yields on Italian and Spanish paper are still near historic highs. Stock markets across the globe likely will tick down this week unless there is more evidence that the EU has its financial house in order.

The New Warren Buffett

A new mystery surrounds who will take Warren Buffett’s  job as head of Berkshire Hathaway (NYSE: BRK-A, BRK-B) if he dies or retires. It has been widely believed that the company would add a CEO to run operations and one or more investment professionals to oversee the huge investment portfolio. A profile of Buffett on “60 Minutes” showed that the “Oracle of Omaha” plans to replace himself as chairman with his son Howard Buffett, who is a farmer on a nearly full-time basis. Buffett commented, “You worry that somebody will be in charge of Berkshire that uses it as their own sandbox in some way; that changes the way that decisions are made in reference to the shareholders. The odds of that happening are very, very low. Having Howie there adds just one extra layer of protection.” Investors who do not want a farmer to play a key role in the conglomerate may not take the news well.

No Jobless Benefits Extension

Congress may not pass a bill to extend jobless benefits into 2012. The first effect will be that 1.7 million Americans completely lose their financial safety nets. The figure would rise to 6 million by the end of 2012. The debate about the extension revolves around several issues. The first is whether, in a time of austerity, the federal government can afford the tens of billions of dollars it would have to pay to extend payments. The second is whether people who receive benefits are less likely to seek jobs because they have little economic incentive to do so. And another is how much the effect would be on the consumer economy, and thus GDP, if 6 million consumers drop out the number of Americans who currently can afford to buy goods and services.

Douglas A. McIntyre

The top calls of the week were seen in the following companies: Avalon Rare Metals Inc. (AMEX: AVL); Berkshire Hathaway Inc. (NYSE: BRK-B); Carrizo Oil & Gas (NASDAQ: CRZO); Domino’s Pizza, Inc. (NYSE: DPZ); Gilead Sciences Inc. (NASDAQ: GILD); Goodyear Tire & Rubber Company (NYSE: GT); Google Inc. (NASDAQ: GOOG); Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR); Hewlett-Packard Co. (NYSE: HPQ); Lululemon Athletica Inc. (NASDAQ: LULU); Research In Motion Ltd. (NASDAQ: RIMM); Sina Corporation (NASDAQ: SINA); and Western Digital Corporation (NYSE: WDC).

We have outlined the research summaries here on each, and we have added color or linked to more details on the calls if applicable. 

Avalon Rare Metals Inc. (AMEX: AVL) is considered the speculative step child in the field of rare-earth metals.  Still, this week came coverage from Citigroup with a “Buy” rating this last Monday. The prior closing price had been $2.63 and the stock ramped mid-week.  The high close was $3.34 on Wednesday even though it closed down over 5% on Friday at $3.05.  The high close in the week would have given a gain of 27% and the gain for the week was still up 16%.  The 52-week range is $2.29 to $10.11, making this a leveraged call with huge upside if things work out at the company.

Berkshire Hathaway Inc. (NYSE: BRK-B) very rarely shows up in research calls, so it was a surprise when Zacks came out and named Warren Buffett conglomerate as the Bull of the Day with a $91.00 target for the next six-months.

Carrizo Oil & Gas (NASDAQ: CRZO) was only a reiterated Buy rating on Thursday by Canaccord Genuity but the implications offer huge upside if the firm is right.  The firm called it a top small cap idea with multiple ways to win and with a “valuation too tepid.” The new $49.00 price target implies upside of 71%. 

Domino’s Pizza, Inc. (NYSE: DPZ) was a cautious call because of valuation, but it may offer insight into how much investors should be willing to pay for the pizza delivery leader.  The stock was started as Hold at KeyBanc on Friday, which was also the day that this hit a 5-year high.  24/7 Wall St. originally went out with the “buy the value here” call early in 2011 when shares were under $20.00 and we had already taken this one off the list because of value concerns.  Friday’s call may point to more and more peak-values here.

The report cited a recent gain of 36% in earnings, with higher operating income across all the business segments except in the finance and financial products operations. The sectors which were noted as performing well were Insurance, Railroad, Utilities and Energy, Manufacturing, Service and Retail.

The growth engine was labeled as the property and casualty insurance businesses with a contribution of approximately 40% of its 2010 operating income.  Another favorable note for the segment was that it maintains capital strength at exceptionally high levels.

So, what is worth?  Apparently it is worth $91.00 per share and Zacks has an “Outperform” rating on Mr. Buffett’s company.  What is interesting is that this $91.00 figure is a 6-month target rather than a one-year price target.  What does this translate to for valuation? The projection is roughly 13.2-times Zacks’ earnings estimate for 2011 and it implies a total return of about 17% in that period.

We would note that there may be one issue with this report, and that is that Warren Buffett himself has always said to watch the firm’s stated book value per share.  The reason behind that is that he admitted that Team Buffett & Munger could effectively make earnings almost anything they wanted to in any single quarter because of its ability to lock-in gains or losses from its vast investment portfolio or by incurring or pushing out charges on assets. Merger expenses could also alter those quarterly figures.

Mr. Buffett made some significant changes to his investment holdings this last quarter, and here were his full equity holdings.

Shares closed Thursday at $77.81 and the 52-week range is $65.35 to $87.65, so if Zacks is right then Berkshire Hathaway is heading for a new year high.

JON C. OGG

Arch Coal, Inc. (NYSE: ACI) named as Bear of the Day with a $13.00 price target at Zacks.
American Tower Corporation (NYSE: AMT) Started as Outperform at Macquarie.
Berkshire Hathaway Inc. (NYSE: BRK.B) named as Bull of the Day with a $91.00 price target at Zacks.
Cliffs Natural Resources Inc. (NYSE: CLF) Raised to Outperform at Credit Suisse.
Crown Castle International Corporation (NYSE: CCI) Started as Outperform at Macquarie.
Deere & Company (NYSE: DE) named as value stock of the day at Zacks.
Domino’s Pizza, Inc. (NYSE: DPZ) Started as Hold at KeyBanc.
Guess? Inc. (NYSE: GES) Cut to Neutral at Citigroup.
Lowe’s Companies Inc. (NYSE: LOW) Raised to Buy at Goldman Sachs.
Lululemon Athletica Inc. (NASDAQ: LULU) Raised to Buy at KeyBanc.
Sina Corporation (NASDAQ: SINA) Raised to Buy at Deutsche Bank
Smith & Nephew plc (NYSE: SNN) Raised to Overweight at Morgan Stanley.
Western Refining Inc. (NYSE: WNR) Raised to Outperform at Credit Suisse.

Argus made changes to its institutional model portfolio: added shares of Walgreen Co. (NYSE: WAG) and sold out of shares of Sun Life Financial Inc. (NYSE: SLF).

Credit Suisse is out positive on generics saying that the news flow on generic Lipitor has obscured the bigger picture on Watson Pharmaceuticals, Inc. (NYSE: WPI) and Teva Pharmaceutical Industries Limited (NASDAQ: TEVA). The firm recommends buying WPI after its recent weakness as strong fundamentals just got cheaper.  It also recommends buying TEVA for the longer term and as a turnaround story for 2012.

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A senior Chinese official says he expects the global recession to last for some time. (Reuters)

Spain’s center-right People’s Party gains a majority in parliament as work on austerity grows. (Reuters)

Delphi Automotive (NYSE: DLPH) may begin M&A work once its IPO is done. (Reuters)

Some retailers, including Gap (NYSE: GPS), Zales (NYSE: ZLC) and Best Buy (NYSE: BBY), expect a hard holiday season. (WSJ)

Pfizer (NYSE: PFE) pays $60 million to settle bribery claims brought by the government. (WSJ)

Clearwire (NASDAQ: CLWR) may skip a large dept payment. (WSJ)

Twenty-two states set partial-work patterns that allow workers to operate part-time and receive reduced unemployment checks. (WSJ)

The used car business is growing quickly in China. (WSJ)

Chevron (NYSE: CVX) takes responsibility for a major spill off Brazil’s coast. (WSJ)

Many monthly magazines have ad page fall-offs in the fourth quarter. (WSJ)

Warren Buffett to invite analysts to the Berkshire Hathaway (NYSE: BRK-B) annual meeting. (WSJ)

Large U.S. companies continue to sell bonds with little impact from troubled financial markets. (WSJ)

Google (NASDAQ: GOOG) has trouble competing with Microsoft (NASDAQ: MSFT) Office. (NYT)

Retailers try to help catalog sales with apps. (NYT)

UBS (NYSE: UBS) may cut its bonus pool. (FT)

Volkswagen to make electric cars in China. (Bloomberg)

Foreign banks’ reserves at the Fed have doubled since the end of last year, as the financial firms seek safety. (Bloomberg)

Douglas A. McIntyre

LinkedIn executives to sell shares. LinkedIn (NYSE: LNKD) executives want to sell a relatively large portion of their shares. This adds to the pressure on the stock . The company has already said it will offer more shares to the public. It also is clear that venture capitalists who invested in the LinkedIn over the years would like to make money on their positions too. Bain says it plans to sell a portion of its position along with LinkedIn executives. It is only natural that management would act similarly in its self-interest. That will not keep other investors from concern about dilution. And, why would executives sell shares now, if LinkedIn’s prospects are so bright? Expect LinkedIn’s stock to suffer because of the announcement.

The headline news about Warren Buffett was that he bought $10.6 billion in IBM (NYSE: IBM) shares. Just as important were other additions and dilutions he made to his portfolio. These became public as Berkshire Hathaway (NYSE: BRK.A, BRK.B), the company Buffett runs, released at list of its third-quarter holdings. Buffett increased his holdings in Wells Fargo (NYSE: WFC), a sign he is not as concerned about a new banking crisis as many bank analysts are. He moved even further into the financial sector with a new investment in Visa (NYSE: V). He also took new positions in military hardware provider General Dynamics (NYSE: GD), DirecTV (NYSE: DTV) and Intel (NYSE: INTC). All of these seem very conservative. Yet, Buffett has usually invested that way.

Occupy Wall Street forced out. For some reason, the financial headlines were dominated by the decision of New York City to use police to remove Occupy Wall Street protestors from the city’s Zuccotti Park. The story was the top headline in the Wall Street Journal and the New York Times. There is a great deal of evidence that the mass of people in their tents had disrupted that sales of businesses in the area. The large number of people in the park presented a public health hazard. Perhaps most important, the protestors were not successful enough for their removal by police to cause a ground swell of support. “Occupy” protestors are being moved out of their quarters by police in other cities. The movement ended almost before it began.

Douglas A. McIntyre

M&T Bank Corporation (NYSE: MTB) is 5.38+ million shares, UP ONLY A TAD from the 5.363 million last quarter but this one had been cut in prior quarters.
Mastercard Inc. (NYSE: MA) was 405,000 shares valued at $128.45 million.  The position is the SAME AS last quarter but still almost double from the quarter before.
Moody’s Corp. (NYSE: MCO) was 28.4 million; SAME AS last quarter but way down from prior quarters and years.
Procter & Gamble (NYSE: PG) was 76.7 million shares and listed as THE SAME as last quarter but lower than the 96.3 million shares in prior quarters.
Sanofi-Aventis (NYSE: SNY) was 4.06 million shares; SAME AS before.
Torchmark Corp. (NYSE: TMK) was more than 4.2 million, a LARGER POSITION than the 2.82 million shares last quarter.
US Bancorp (NYSE: USB) was roughly 69 million shares; SAME AS before.
USG Corp. (NYSE: USG) was 17.072 million shares; SAME AS before.
United Parcel Service (NYSE: UPS) was 1.429 million shares; SAME AS before.
Verisk Analytics, Inc. (NASDAQ: VRSK) was ALMOST DOUBLE in shares at 4.202 million worth $146.1 million versus the 2,101,125 shares a quarter before when it had been started as a new position.
Visa Inc. (NYSE: V) is a NEW POSITION of 2.291 million shares worth $96.44 million.
Wal-Mart Stores Inc. (NYSE: WMT) was just over 39 million shares; SAME AS before after having been raised in 2010.
Washington Post (NYSE: WPO) was over 1.72 million shares; SAME AS before and Buffett kept his word so far about holding the Washington Post shares despite stepping down from its board.
Wells Fargo & Co. (NYSE: WFC) over 361 million shares a HIGHER POSITION than the 352+ million last quarter.

PAGE ONE…BUFFETT HOLDINGS ‘A to K’

As noted earlier… today’s holding disclosure has missing data as Berkshire Hathaway was given permission and likely still does not include the full holdings: Confidential information has been omitted from the Form 13F and filed separately with the Commission.

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American Express Co. (NYSE: AXP) was over 151.6 million shares, SAME AS last quarter.
Bank of New York Mellon Corp. (NYSE: BK) was 1,793,915 shares, SAME AS last quarter.
CVS Caremark Corporation (NYSE: CVS) is a NEW POSITION of 5,661,000 shares worth $190.1 million.
Comdisco Holdings (NASDAQ: CDCO) was roughly 1.5 million shares, SAME AS BEFORE.
Coca Cola Co. (NYSE: KO) was right at 200 million shares, SAME AS BEFORE.
ConocoPhillips (NYSE: COP) is roughly 29.1 million shares, roughly the SAME AS BEFORE but it is still lower than previous quarters.
Costco Wholesale (NASDAQ: COST) 4,333,363 Shares, SAME AS last quarter after having lowered it before.
DirecTV (NASDAQ: DTV) is a NEW POSITION listed as 4,249,400 shares worth $ 179.6 million.
Dollar General Corporation (NYSE: DG) is a LARGER POSITION at 4.497 million shares worth some $169.8 million versus last quarter’s new position of 1,497,800 shares.  This one of our Top Stocks for the Next Decade.
Exxon Mobil Corp. (NYSE: XOM) was 421,800 shares; SAME AS before but lower than the 1.276 million shares originally.
Gannett Co. (NYSE: GCI) was 1.74 million, SAME AS BEFORE but decreased in prior quarters.
General Dynamics Corporation (NYSE: GD) is a NEW POSITION of 3.064 million shares worth $174.3 million.
General Electric Corp. (NYSE: GE) is 7.777 million shares; SAME AS before.  Please note that this does not include the huge preferred shares from late in 2008 that are likely to be called from Buffett later this year.
GlaxoSmithKline (NYSE: GSK) 1.51 million shares, SAME AS last quarter.
Ingersoll-Rand (NYSE: IR) was 636,600; SAME AS last quarter but still way down from prior reports.
Intel Corporation (NASDAQ: INTC) is a NEW POSITION of 9.333 million shares worth $199.6 million. 
International Business Machines Corporation (NYSE: IBM)  is a NEW POSITION and we found out this morning that Buffett’s stake is nearly 64 million shares worth well over $10 billion with an average cost of about $170 per share.
Johnson & Johnson (NYSE: JNJ) was just over 37.4 million, a LOWER POSITION versus the 42.6 million shares the June quarter and way under the peak of 62 million shares at one point in prior quarters.
Kraft Foods (NYSE: KFT) was a LOWER POSITION at 89.7+ million versus 99,467,624 shares at the June quarter and way down from before selling during the Cadbury purchase.

Despite the revelation made this morning and despite the new positions in IBM and Intel, there is still data not represented in Berkshire Hathaway’s full holdings: Confidential information has been omitted from the Form 13F and filed separately with the Commission.  It looks as though Warren Buffett was again given permission to delay or omit some of the new holdings.

PAGE TWO…BUFFETT HOLDINGS ‘L to Z’

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JON C. OGG

Some positions which we expect ro would just assume are in Bank of America Corporation (NYSE: BAC), Dollar General Corporation (NYSE: DG), Exxon Mobil Corporation (NYSE: XOM), ConocoPhillips (NYSE: COP), Mastercard Inc. (NYSE: MA), Verisk Analytics, Inc. (NASDAQ: VRSK), Wal-Mart Stores Inc. (NYSE: WMT), and Wells Fargo & Co. (NYSE: WFC).  Just keep in mind that Berkshire Hathaway is granted “Confidential Treatment” in some positions, so it is possible that many others are present but not known by the public.

The total invested was $23.9 billion in the quarter and that appears to be more than any quarter of the last decade and then some.  Almost $7 billion of that was classified as equities.  Keep in mind that the $5 billion for BofA and the $9 billion or so for Lubrizol were a part of the total figures.

Bank of America Corporation (NYSE: BAC) was not in the prior holdings one quarter ago, but what we do know is that Buffett came to the rescue with a $5 billion preferred share purchase where Buffett also gets all of those warrants.  Technically this will not appear in the mid-November filing that shows Buffett’s September 30, 2011 holdings.  It doesn’t matter.  This is now one of his larger positions.

Dollar General Corporation (NYSE: DG) was listed as a new of 1,497,800 shares a quarter ago and our take is that Buffett (actually Todd Combs) will have bought more shares in a recent secondary offering.  There is a reason this was one of our own Top Stocks To Own for the Next Decade.

Exxon Mobil Corporation (NYSE: XOM) is one we continue wonder why Team Buffett lightened up on.  The team already pledged long ago to wind out if ConocoPhillips (NYSE: COP) and that really never happened.  Berkshire’s latest Exxon position was 421,800 shares, which saw the same as before but lower than the 1.276 million shares originally.  Buffett cannot easily just put a few billion to work in most companies, but he easily could accomplish that in Exxon.

Mastercard Inc. (NYSE: MA) was a recent position and it was almost doubled in the last quarter to some 405,000 shares.  With how well this performed and with its toll-keeper business model we would just assume that Team Buffett still likes it and maybe likes it even more.

Verisk Analytics, Inc. (NASDAQ: VRSK) was another new position and it seemed an odd fit for Team Buffett.  That is likely because it was Todd Combs making the call.  The position was 2,101,125 shares worth “only” about $72.7 million as of June 30.  If they liked it before, maybe they liked it again.

Wal-Mart Stores Inc. (NYSE: WMT) is another retailer that we belive Team Buffett may have warmed to for dividends and for valuation.  This position was raised in 2010 but has held steady at just over 39 million shares.  If you see that Wal-Mart is barely 1% off of its 52-week high, it sure seems as though some investors might be betting that the old man in Omaha decided that good things were happening in Bentonville, Arkansas.

Wells Fargo & Co. (NYSE: WFC) has long been Warren Buffett’s favorite bank and he has gradually been adding shares more and more through time.  This position was just over 368.6 million shares and it has grown each quarter of late.  If Team Buffett was adding big positions, it seems that they might have kept their finger on the “buy button” here even when you consider the BofA $5 billion preferred share and warrant investment.

Berkshire Hathaway’s most current portfolio of equity holdings is available here.

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JON C. OGG