Exxon Mobil is actually the one company in oil and gas, or in any sector period, that is so big that Buffett could invest into it without ever having to worry about reaching maximum limits with regulators. Buffett’s stake was valued at almost $4 billion in early 2014 and, even at the lower prices of early 2016, its market value is over $360 billion.
It is likely General Dynamics Corp. (NYSE: GD) was another position that was added on by Buffett’s team, rather than by Buffett himself, as a new position of almost 4 million shares in the third quarter of 2011. Shares averaged about $60 during that quarter, and they were sold in the second quarter of 2013 when shares averaged about $80. They are close to $140 in 2016, and with a consensus price target of almost $160. It still pays close to a 2.3% yield.
If we had to guess why General Dynamics was sold, maybe it was just so the team could lock in gains – or a manager close-out other than Buffett himself. Other than that, this was always a bit of a mystery sale. General Dynamics now has a market cap of $43 billion.
Home Depot Inc. (NYSE: HD) is another one of the companies that fit right into the Buffett wheelhouse, as did a stake in rival Lowe’s Companies Inc. (NYSE: LOW). Home Depot has a dominant market share, it grows dividends, it is well run again and it is tied to the beloved housing (building and improvement) arena, which Buffett likes. It is a wonder that Buffett did not just buy endlessly here as Home Depot’s market cap recently challenged $170 billion.
Berkshire Hathaway only dabbled minimally in both, but this would have been a spot where a lot of money could have been put to work. Home Depot was sold out as a holding in mid-2010 when shares averaged close to $30, compared with $135 now, and with annualized dividends having jumped to $2.76 from under $1.00 per share then. Perhaps the Buffett team decided they already had ample housing exposure at the time.
This is another stake that was likely taken by Buffett’s portfolio management team, but Intel Corp. (NASDAQ: INTC) is the one technology stock that Buffett could have taken a dominant role in for the control of processors rather than throwing money into the dark hole of IBM. It may be years before Intel is considered a great company without relying on personal computers (PCs), but its growth as an outsourced manufacturer in memory and its growth in integrated subsystems for the growing Internet of Things and connected systems will make the PC dominance argument fade through time.
While the PC market is under-appreciated and has diminished, Intel’s market share for PC processors remains at or well above 80%. Its market cap of $150 billion would have meant that Buffett could own close to $15 billion worth of stock before reaching a 10% hurdle counted by the SEC for reporting purposes. And yes, Intel’s $150 billion in market is larger than IBM’s $142 billion or so.
Johnson & Johnson
Over the past decade, Johnson & Johnson (NYSE: JNJ) has been a significant driver of earnings and dividends growth. Revenues in 2005 were $50 billion, and that was $74 billion in 2014 before a small pullback in 2015. The current dividend is $3.00, versus $1.32 in 2005, following in a 50-year or more trend of dividend hikes. The company has ridden through product issues and quality control only to come out ahead.
Buffett loves companies with solid market share that have an assured position in consumer goods or medical products, and Johnson & Johnson has been a serious winner on that front. Some may argue that Buffett’s stake of 327,100 shares means he still holds it, but Buffett once had 62 million shares at the peak, and that stake was reduced over multiple reporting periods.