What Buffett Sold, What He Bought and What's to Be Made of It?

Andy Obermueller's picture

Wednesday, February 17, 2010 - 5:31pm

by Andy Obermueller

Let's get down to it.

Here's what Warren Buffett's Berkshire Hathaway (NYSE: BRK-B) sold in the most recent quarter, according to Tuesday's filing with the Securities and Exchange Commission:

  • 19.7 million shares of ConocoPhillips (NYSE: COP), an acquisition he has called a major mistake. The sale amounted to 34% of his stake in the oil company.
  • 854,490 shares of ExxonMobil (NYSE: XOM)
     
  • 1.2 million shares of Gannett (NYSE: GCI), the newspaper publisher, which represented 36% of his holdings in the company. (He did not sell any of his Washington Post (NYSE: WPO) stock, though it's hard to say whether that's because of his belief in the strength of the company or because of his fondness for Katharine Graham, the paper's former publisher and his longtime confidante.)
     
  • 2.1 million shares of industrial conglomerate Ingersoll-Rand (NYSE: IR)
  • 9.7 million shares of Johnson & Johnson (NYSE: JNJ)
  • 7.4 million shares of Moody's (NYSE: MCO), which lost some of its luster in the subprime debacle and which now faces lawsuits about the ratings it gave mortgage securities. Plaintiffs include the California Public Employees Retirement System, whose lawsuit should be required reading for any fixed income investor.
     
  • 8.8 million shares of Procter & Gamble (NYSE: PG)
  • 681,572 shares of SunTrust Banks (NYSE: STI)
  • 2.2 million shares of UnitedHealth Group (NYSE: UNH) the health insurer whose shares have been on a nice tear of late as the prospect of a nationalized health care system has grown unlikely. Buffett also offloaded more than 2.0 million shares of WellPoint (NYSE: WLP), another large health insurer that has seen similar gains to United Health.

Each of these sales helped Buffett raise cash for his Burlington Northern takeover. And it can be inferred that Buffett sees more potential from Burlington than he does from any of the companies he sold.

So the converse can be said for the each of the five companies that he bought. Buffett -- in a quarter in which he sold stocks to raise cash for his railroad deal -- couldn't resist spending some on Wells Fargo (NYSE: WFC), Walmart (NYSE: WMT), waste management provider Republic Services (NYSE: RSG), information protection company Iron Mountain (NYSE: IRM) and medical device maker Becton Dickinson (NYSE: BDX).

Of these purchases, two things must be said: Buffett would buy Wells Fargo outright if he could, but not even the richest man in the world has enough jack to pull that deal off, though he is the largest shareholder. 

Buffett does, however, have the chance -- and the money -- to take over a large part the trash business in this country.

And Buffett has a partner in mind -- his good friend Bill Gates.

I for the life of me cannot understand why no one is making a big deal of this, but if you look at the holdings of the Gates Foundation and of Cascade Investments, Gates' personal hedge fund, it's pretty clear what's going on. Gates made huge investments in Republic Services in 2009 -- in fact, they amounted to the largest insider buy of the year.

Now Buffett is following suit and clearly demonstrating that he thinks the trash business has more upside than railroads or any of the stocks he sold. That is the most compelling element of Buffett's latest filing. The smart money -- that is, yours and mine -- should follow.

Here's the play-by-play of Buffett's $58 billion portfolio:

    Current Filing (Q4 2009 Previous Filing (Q3 2009 Change % Change
1 American Express (AXP) 151,610,700 151,610,700 0 0%
2 Bank of America (BAC) 5,000,000 5,000,000 0 0%
3 Becton Dickinson (BDX)
1,500,000 1,200,000 300,000
+25%
4 Burlington Northern (BNI) 76,777,029 76,777,029 0 0%
5 Carmax (KMX) 8,000,000 9,000,000 -1,000,000 -11%
6 Coca-Cola (KO) 200,000,000 200,000,000 0 0%
7 Comcast (CMCSA) 12,000,000 12,000,000 0 0%
8 Comdisco (CDCO) 1,538,377 1,538,377 0 0%
9 ConocoPhilips (COP) 37,711,330 57,430,168 -19,718,838 -34%
10 Costco (COST) 5,254,000 5,254,000 0 0%
11 ExxonMobil (XOM) 421,800 1,276,290 -854,490 -67%
12 Gannett (GCI) 2,202,200 3,447,600 -1,245,400 -36%
13 General Electric (GE) 77,777,900 7,777,900 0 0%
14 GlaxoSmithKline (GSK) 1,510,500 1,510,500 0 0%
15 Home Depot (HD) 2,757,898 2,757,898 0 0%
16 Ingersoll-Rand (IR) 5,636,600 7,782,600 -2,146,000 -28%
17 Iron Mountain (IRM)
7,000,000 3,372,200 3,627,800
+108%
18 J&J (JNJ) 27,132,758 36,914,633 -9,781,875 -26%
19 Kraft (KFT) 138,272,500 138,272,500 0 0%
20 Lowes Cos (LOW) 6,500,000 6,500,000 0 0%
21 M&T Bank (MTB) 6,715,060 6,715,060 0 0%
22 Moody's (MCO) 31,814,610 39,219,312 -7,404,702 -19%
23 NRG Energy (NRG) 6,000,000 6,000,000 0 0%
24 Nalco Holding (NLC) 9,000,000 9,000,000 0 0%
25 Nestle (NSRGY) 3,400,000 3,400,000 0 0%
26 Nike (NIKE) 7,641,000 7,641,000 0 0%
27 Procter & Gamble (PG) 87,503,411 96,316,005 -8,812,594 -9%
28 Republic Services (RSG)
8,290,500 3,625,000
4,665,500
+129%
29 Sanofi-Aventis (SNY) 3,903,933 3,903,933 0 0%
30 SunTrust Banks (STI) 2,398,206 3,079,778 -681,572 -22%
31 Torchmark (TMK) 2,823,879 2,823,879 0 0%
32 Travelers (TRV) 27,336 27,336 0 0%
33 U.S. Bancorp (USB) 69,039,426 69,039,426 0 0%
34 USG Corp. (USG) 17,072,192 17,072,192 0 0%
35 UPS Inc. (UPS) 1,429,200 1,429,200 0 0%
36 UnitedHealth (UNH) 1,175,000 3,400,000 -2,225,000 -65%
37 Wal-Mart Stores (WMT)
39,037,142 37,836,642
1,200,500
+3%
38 Washington Post (WPO) 1,727,765 1,727,765 0 0%
39 Wells Fargo (WFC)
320,088,385 312,355,657
6,732,728
+2%
40 Wellpoint (WLP) 1,343,820 3,394,212 -2,050392 -60%
41 Wesco Financial (WSC) 5,703,087 5,703,087 0 0%
Andy Obermueller does not personally hold positions in any securities mentioned in this article.
StreetAuthority LLC owns shares of BRK-B in one or more of its “real money” portfolios.