Berkshire Hathaway Inc. (NYSE: BRK-B) and Warren Buffett disclosed their full equity holdings this week. The first thing we noticed was that there was a total equity value of $92.035 billion at the end of September, versus $89.03 billion at the end of June. What stood out was that there were really only about five transactions that really mattered . Still, they offer great insight and opportunity.
24/7 Wall St. wanted to identify the most important Buffett transactions of the past quarter. We wanted to see what the expected value is ahead for individual investors who may want to copy the Oracle of Omaha’s strategy. We also wanted to get inside Mr. Buffett’s head to see what he was thinking and how our readers can benefit.
The most important change was one we have called for endlessly, and we joked that Buffett finally took our suggestion. This was a new stake of Exxon Mobil Corp. (NYSE: XOM) with almost 40.1 million shares. We just outlined the 10 reasons he took such a big stake, and we would say that it seems likely that Team Buffett would only grow this stake through time. Shares were up yet another 1% on Friday trading to above $94.00, and the consensus analyst price target is $95.54. Note that some analysts see it rising to well over $100 in the year, or years, ahead. Buffett even made a statement in favor of Exxon, because he substantially lowered his stake in ConocoPhillips.
General Electric Co. (NYSE: GE) appears as a no-change on the portfolio at a mere 588,900 shares. What readers need to keep in mind is that Buffett recently took delivery of 12 million or so shares tied to the warrants from the preferred investment that he secured during the recession. GE is now spinning off its retail finance unit in an IPO in 2014, and the company aims to be evaluated as an industrial conglomerate rather than as an industrial company with a huge retail bank associated with it. GE shares were up almost 1% in mid-Friday trading at a new post-recession high. We think that Buffett will grow this stake, particularly if the value adjustment transition looks more likely.
Wells Fargo & Co. (NYSE WFC) is one stake that just continues to grow and grow. And it has grown yet again. After Friday’s mid-day gain of 1% to $34.50, this stake is now the largest by far and worth a hair over $20 billion. This means that Buffett is willing to have 21% of his entire equity holdings in one giant banking stock. Buffett obviously views this as the go-to mortgage play in America. He also likes that Wells Fargo does not have extensive trading operations that put the bank at as much perceived risk. The consensus price target from analysts is $46.00, which would be an all-time high. Buffett himself probably thinks Wells Fargo is worth even more, plus he gets the 2.8% dividend to boot that is actually a much higher yield for him if you tally up his average cost.
U.S. Bancorp (NYSE: USB) is nowhere near as large of a stake as Wells Fargo, but Warren Buffett keeps growing this stake as well. Its higher-end customer has to be attractive to Buffett. The stake grew to 79.11 million shares, versus a prior stake of 78.277 million shares. It had also been raised from 61.458 million shares prior to that. This stock was not reacting positively and was actually down $0.10 at $38.18 in mid-Friday trading. Still, its shares did briefly hit a new high of $38.39 on Friday. The consensus price target was $39.97 on last look, and new investors are getting a 2.4% yield here, even at these high prices.
DaVita HealthCare Partners Inc. (NYSE: DVA) was the last of most important stakes that was grown in the Berkshire Hathaway portfolio. This was officially listed as 31.446 million shares, and that was higher last quarter, but more recent filings show that the stake is now even larger. Buffett likes owning a piece of the leader in kidney dialysis centers, and the company even entered a standstill agreement whereby Berkshire Hathaway is not to take more than a 25% stake. That stake is now about 17%, and we would expect that to only grow ahead. Shares were at $58.90 mid-Friday, against a 52-week range of $52.23 to $65.67, and versus an analyst consensus price target of $61.42.