FOUR INDIVIDUAL CIRCUMSTANCES

Kraft Foods Inc. (NYSE: KFT) is 105.21 million shares that are still worth more than $3 billion.  The position if down from the 106.7+ million a quarter before and down from the 138+ million before Buffett was critical of the Cadbury deal.  The problem is that between Nestle and an $11+ billion stake value in Coca-Cola, Buffett may need more than just Kraft here.  Adding another food giant might not be how Buffett wants to go, but the Kraft concentration seems one that is a fully-valued proposition for the time being.  Our take is that Buffett should (and will likely continue) shrinking a bit more of the Kraft stake.

Moody’s Corp. (NYSE: MCO) seems to be continually shrinking at 30.783 million shares.  That was compared to 30.83 million a quarter earlier and down from the 48 million originally before two more quarters of decreases.  No matter how you rank today’s world and tomorrow’s world, the “forever” investment term just got away from Ol’ Warren here.  Moody’s has outlived its usefulness and its business model is likely to never be as loose and as profitable as it once was.  If we are wrong on that front, then it is because the world is all living in mansions and no one cares that it is a bubble.  Buffett could have saved vast funds here but his forever mentality got in the way of logic and reason when there was still plenty of time to sell.

Republic Services Inc. (NYSE: RSG) was kept the same at 10.827 million shares, but that was still up from two quarters ago.  This is a position that Buffett needs to be adding more of for the Berkshire holdings.  It is smaller than rival Waste Management and it enjoys many barriers to entry, a business model that works rain or shine, and fits in perfectly with the “forever” plan.  The only thing holding Buffett back here (most likely) is that he piggy-backed into this one with Bill Gates via Gates’ Cascades, and that is over a 12% stake for Gates and now about 2.8% for Berkshire.  It may require more filings, but this position makes perfect sense for the Berkshire family here to become much larger.  Gates even has his right hand man on the board of Republic.

Comdisco Holdings (NASDAQ: CDCO) roughly 1.5 million shares, the same as before.  Nothing more needs to be said?  This is not even worth having as a line item, and the recoup of what is left is not enough to matter for Warren and friends.

THE HOUSING & HOME IMPROVEMENT TRADE-OFF

Acme Brick, USG, Clayton Homes, HomeServices, Star Furniture, Nebraska Furniture Mart, Jordan’s Furniture… and on.  How much housing exposure does Buffett really need?  This sector ALWAYS comes back in time but there is a real rivalry here.  Buffett has kept a steady position of Home Depot Inc. (NYSE: HD) at 2.757 million shares and Lowe’s Companies (NYSE: LOW) at 6.5 million shares.  Buffett doesn’t pair Coke against Pepsi, why does he have a Home Depot stake of $79 million and a stake in Lowe’s of $143 million?  This makes no sense.  Picking which one of these two behemoths is a better stock versus the other depends upon which point in time one is performing better than the other.  Buffett may want to pick which he has the best tax advantage in and make his statement by going with one over the other.  The conflict here is that this may actually hurt some of his supply operations if it disrupts a relationship.  In a perfect world that might not matter (like the world is perfect), but having these two positions rather than one concentrated position only makes sense here if it is locking up business for Buffett.  In today’s world, the numbers might not matter on that front and that may be the case for some time to come.