This article is part of a series that provides a quarterly analysis of changes made to Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) 13F equity portfolio. It is based on Warren Buffett's regulatory 13F form filed on 15/05/2018. Please visit our 10 year Berkshire Hathaways Investment Portfolio article series to get an idea of how its positions have evolved over the years and how our progress has been updated in the fourth quarter of 2017.
During the first quarter of 2018, the value of Berkshire Hathaway's 13F equity portfolio fell marginally from $ 191B to $ 189B. The top 5 positions account for ~ 65% of the portfolio: Apple Inc., Wells Fargo, Bank of America, Kraft Heinz Co. and Coca Cola. There are 43 individual equity positions, many of which are tiny compared to the total size of the portfolio.
International Business Machines (NYSE: IBM): IBM's original position was acquired in the third quarter of 2011 at prices ranging from $ 158 to $ 185. By the fourth quarter of 2016, the number of shares increased by almost 40% through regular purchases. There was a turnaround in the first quarter of 2017: ~ 21% sold at prices between $ 166 and $ 182, followed by another ~ 16% reduction in early May at prices between $ 150 and $ 160. In the second half of 2017, the share was almost sold out at prices between $ 140 and $ 162. The stock is currently trading at ~ 144. The tiny little position that remained was eliminated this quarter.
Note: Berkshire's cost base on IBM was ~ $ 170 per share.
Graham Holdings (NYSE: GHC): The tiny little 0.03% position in GHC was divested this quarter.
Apple Inc. (NASDAQ: AAPL): AAPL's largest 13F portfolio share is 21.27%. It was founded in the first quarter of 2016 at prices between $ 93 and $ 110, and rose in the following quarter by ~ 55% at prices between $ 90 and $ 112. Q4 2016 saw another ~ 275% rise in prices between $ 106 and $ 118 and this was followed by a doubling of participation in January 2017 at prices between $ 116 and $ 122. There was another ~ 23% growth in the last quarter at prices between $ 154 and $ 176, followed by an increase of ~ 45% in that quarter at prices between $ 155 and $ 182. The stock is currently trading at $ 186. Berkshire Hathaway owns ~ 4.9% of the outstanding shares of Apple Inc.
Note: As of Q4 2017, Berkshire's total cost base for Apple was $ 126 per share.
US Bancorp (NYSE: USB): The 2.43% USB share has been in the portfolio since 2006. The original position was tripled in the period 2007-2009. It was held relatively steady until Q2 2013 when ~ 17M shares were bought at prices ranging from $ 32 to $ 36. Berkshire's cost base for USB is ~ $ 32 and the stock is now at $ 51.12. There was a ~ 4% growth this quarter.
Bank of New York Mellon Corp. (NYSE: BK) : BK is a 1.70% of the 13F portfolio share. Most of the original position was acquired in the second quarter of 2012 at prices between $ 19.50 and $ 25. The share was increased by 30% in the second quarter of 2013 at prices between $ 26.50 and $ 30.50. The five quarters to the third quarter of 2015 had seen a turnaround as there was a combined 20% reduction in prices between $ 36 and $ 45. In the first quarter of 2017, the price increased from $ 43.50 to $ 49 by approximately 50%, followed by a similar increase in the following quarter at prices between $ 46 and $ 51. In the last quarter there was a further increase of ~ 20%. priced between $ 51 and $ 55. The stock is currently trading at $ 56.89. Berkshire's cost base for BK is ~ $ 42 per share. There was an increase of 2% in this quarter.
Delta Air Lines (NYSE: DAL): The DAL was a very small position of 0.19% in the third quarter of 2016. The share rose $ 850% in the fourth quarter of 2016 at prices between $ 39 and $ 52. The stock is currently trading at $ 52.37 and now accounts for 1.55% of the portfolio. There was a slight increase in this quarter.
Note: Berkshire controls ~ 8% of DAL.
Monsanto Company (NYSE: MON): The 1.17% MON position was established in Q4 2016 at prices between $ 98 and $ 106 and the stock currently trades at ~ $ 125. In September 2016, Bayer AG (OTCPK: BAYRY) agreed to acquire Monsanto as part of a $ 128 cash deal. The last two quarters saw a 46% increase in stock ownership at prices between $ 115 and $ 122, followed by a 62% increase in prices between $ 116 and $ 124.
Teva Pharmaceutical (NYSE: TEVA): TEVA is a very small 0.37% of the portfolio's share in the last quarter, priced at between $ 11.20 and $ 19.33 and more than doubling this quarter Prices between $ 16.50 and $ 22. The stock is currently trading at $ 20.30
Share is declining:
Wells Fargo & Co. (NYSE: WFC) : WFC is Buffett's second largest stake in 14.54% of the 13F portfolio. Recent activity follows: around 9M shares were sold in the second quarter of 2017 at around $ 53 per share to bring the share below the 10% threshold. The stock is currently trading at 54.75. Berkshire's cost base is ~ $ 24.50. The last three quarters have seen a marginal cut.
Phillips 66 (NYSE: PSX): PSX holds 2.32% of the portfolio. It is a long term position. From the fourth quarter of 2014, the share was very small at ~ 0.5% of the portfolio (~ 6.5 million shares). Most of the current share was built in Q2 & Q3 2015 at prices between $ 70.50 and $ 84.50. In February, it was announced that Phillips 66 had agreed to repurchase 35 million Berkshire shares at a price of $ 93.725 per share. Berkshire stated that the sole purpose of the transaction is to eliminate additional regulatory requirements associated with over 10% participation. The stock is currently trading at $ 118.
Note 1: Berkshire's cost base was $ 78.31 for the fourth quarter of 2017.
Note 2: Berkshire avoided publishing PSX shares in the original Q2 2015 13F by issuing "Section 13 (f) Confidential Treatment Requests". A change filed on 04.09.2015 revealed the enormous structure of piles. Berkshire controls ~ 16% of the PSX at this time.
Charter Communications (NASDAQ: CHTR): CHTR is a 1.35% of the portfolio position. It was founded in the second quarter of 2014 at prices between $ 118 and $ 158 and has more than doubled in the following quarter at prices between $ 151 and $ 164. Q4 2014 saw another ~ 25% rise in prices between $ 140 and $ 170. In the second quarter of 2015, the position was again increased by ~ 42% at prices between $ 168 and $ 193, followed by another ~ 21% increase in the following Q2 2016 saw a ~ 10% trim at prices between $ 198 and $ 233. The stock is currently trading at ~ 270 USD, compared to Berkshire's cost base of ~ 178 USD. There was ~ 10% sale in Q4 2017 and this was followed by a ~ 3% trimming this quarter.
United Continental Holdings (NYSE: UAL): A tiny small 0.18% UAL position as of Q3 2016 saw a tremendous ~ 540% increase in Q4 2016 at prices ranging from $ 52.50 to $ 76 , It's currently about $ 68.03. The share is ~ 1% of the portfolio. There were only marginal sales in this quarter.
Note: Berkshire controls ~ 9% of the UAL.
Liberty Global PLC (NASDAQ: LBTYA): The position was quoted in the 4th quarter of 2013 at between $ 37.50 and $ 44.50 (adjusted for the stock split 03/2014) and over the following two quarters at prices between $ 38.50 and $ 46 rose significantly. In the three quarters to Q1 2016, there was also an increase of about 30% at prices between 30 and 50 USD. In the second quarter of 2016, the price increased by another 17% to $ 27 to $ 39. The stock now stands at $ 29.08 and the proportion is 0.42% of the 13F portfolio. There was a reduction of ~ 7% in this quarter.
Sanofi (NYSE: SNY): The tiny 0.08% of SNY's portfolio share was marginally reduced this quarter.
Note: For each year's annual report, Berkshire had a $ 1.7 billion position in Sanofi – in addition to the very small ADR portion listed in the 13F report, Berkshire held Sanofi securities Euronext Paris were listed. This year's annual report does not show this as a top position as it probably fell off the top-15.
Verisk Analytics (NASDAQ: VRSK): The tiny little VRSK share of 0.02% has been reduced by ~ 80% quarter.
Bank of America (NYSE: BAC): Berkshire established this large (top 3) 10.78% of its portfolio position through the exercise of Bank of America Warrants. The warrants had an exercise price of $ 7.14 against the current price of $ 31.22. The costs to be exercised were $ 5 billion and were funded by the $ 5 billion in 6% preferred stock they held.
Note: Berkshire's stake in Bank of America is ~ 6.5%.
Kraft Heinz Co. (NASDAQ: KHC): KHC is currently the fourth-largest 13F equity holding with 10.74% of the portfolio. Kraft Heinz began trading Berkshire in July 2015 with just over 325 million shares (~ 27% of the business). The investment resulted from two transactions involving 3G capital as partners: a net investment of $ 4B in 2013 for half of Heinz and an investment of $ 5B for the acquisition of Kraft Foods Group in early 2015. Berkshire's cost base is on KHC under $ 30 per share compared to the current price of $ 59.04.
Note: In February, it was announced that Warren Buffett will retire from the Kraft Board this year as he reduces his travel commitments.
American Express (NYSE: AXP) and Coca-Cola (NYSE: KO): These two very large stakes have been held constant for the past ~ 4 years. Buffett has said that these positions are held "permanently". Berkshire's cost base for AXP and KO is approximately $ 8.49 and $ 3.25, respectively, and ownership is ~ 17.6% and ~ 9.4%, respectively.
Moody's Corp. (NYSE: MCO): MCO a is 2.11% of the 13F portfolio share. It's a very long-term position and Buffett's cost base is $ 10.05. The stock is currently trading at ~ 171. Berkshire controls ~ 13% of the business.
Goldman Sachs (NYSE: GS): GS is a 1.46% of the fourth-quarter 2013 portfolio. Berkshire Hathaway received $ 5B warrants to buy GS shares in the financial crisis (October 2008) at an exercise price of $ 115 (43.5 million shares) due to expire on October 1, 2013. Buffett exercised the right before the end of this long position. In the third quarter of 2015, a price reduction of 13% at prices between $ 172 and $ 213 was recorded. It is currently trading at ~ $ 242.
Southwest Airlines (NYSE: LUV): LUV has purchased a 1.44% portfolio share in the 4th quarter of 2016 priced between $ 38.50 and $ 51, rising 10% in the following quarter between $ 49.50 and $ 59. The stock is now at $ 51.70.
Note: Berkshire owns ~ 8% of LUV.
DaVita Inc. (NYSE: DVA) : DVA is a 1.35% of its portfolio position, which has been aggressively built over several quarters: The original share was doubled in the first quarter of 2012, down in the second quarter of 2012 over 50%, in the fourth quarter of 2012 by 24% and in the first quarter of 2013 by a further 16%. Since then, there have been minor purchases. Most of the pile construction took place at prices between $ 30 and $ 49. The stock is currently trading at $ 66.29, compared to Berkshire's total cost base of $ 45 per share.
Note 1: Berkshire's share of DaVita is ~ 22%. In May 2013, Ted Weschler of Berkshire signed a contract with DVA limiting the number of open market purchases to 25% of the company.
American Airlines (NASDAQ: AAL): The AAL stake was first acquired in the third quarter of 2016 now stands at 1.27% of the portfolio. The original purchase was priced between $ 28 and $ 39, doubling in Q4 2016 at prices ranging from $ 36.50 to $ 50. The stock is now priced at $ 43.19. There was a ~ 2% trimming in the last quarter.
Note: Berkshire controls 9.6% of AAL.
Liberty Sirius XM Group (NASDAQ: LSXMA): The tracking inventory was Shareholders received 1 share of the Liberty Sirius XM Group, 0.25 shares of Liberty Media Group and 0 , 1 Liberty Braves Group shares for each share held. Berkshire held 30 million Liberty Media shares, for which it received the same number of Liberty Sirius XM Group shares. In the second quarter of 2017, there was a 40% increase in shares on a cost basis of ~ $ 40 per share. The stock is now at $ 44.56.
Note: LSXMA / LSXMK trades at a significant NAV discount to parent company valuation (SIRI). For investors trying to follow Buffett, LSXMA / LSXMK is a good option for further investigation.
General Motors (NYSE: GM) : GM is ~ 1% of the 13F portfolio position, first purchased in the first quarter of 2012 at prices ranging from $ 21 to $ 30. Position size increased six-fold by the third quarter of 2017 (10 million shares to 60 million shares). In the last quarter, a reduction was recorded: ~ 17% were sold at prices between $ 40.50 and $ 46.50. The stock is currently trading at 36.94. In total, Berkshire's cost base for GM is $ 30.16
USG Corporation (NYSE: USG) : The USG is a very long-term holding, and in the fourth quarter of 2013 was a significant increase Exchange of Notes at $ 11.40 per share – Berkshire acquired the convertible during the financial crisis (2/2009) and USG decided on December 16, 2013 to redeem the convertible bonds. In the second quarter of 2014, the stake increased by approximately 12% at prices between 30 and 33 US dollars. The stock is currently trading at 41.43. Buffett controls approximately 31% of the business and its cost base is ~ $ 19.
Note: In March, the USG Board rejected a $ 42 cash offer from Knauf. Partly in response, Berkshire Hathaway issued a bill last month announcing that they would vote against USG directors at the upcoming annual meeting. Earlier this month, the USG agreed to open sales talks with Knauf.
VeriSign Inc. (NASDAQ: VRSN) : VRSN was first acquired in the fourth quarter of 2012 at prices ranging from $ 34 to $ 49.50. The position more than doubled in the first quarter of 2013, priced between $ 38 and $ 48. In the following quarter, the price increased by a third to $ 44 to $ 49. In the first and second quarter of 2014, the price rose by 17% to 47 to 63 US dollars. The stock is currently priced at $ 127 and the position at 0.81% of the portfolio (~ 10% of the business).
Sirius XM Holdings (NASDAQ: SIRI): The 0.39% SIRI share was purchased in the fourth quarter of 2016, priced between $ 4.08 and $ 4.61. Q2 2017 saw sale: ~ 20% off priced between $ 4.70 and $ 5.50. The stock currently stands at $ 6.87.
Axalta Coating Systems (NYSE: AXTA): AXTA is a small fraction of 0.37% of the portfolio created in the second quarter of 2015 at prices between $ 28 and $ 36, rising by ~ 16% quarter-to-quarter between $ 24.50 and $ 33.50. The stock is currently trading at $ 31.30. Berkshire owns ~ 9.8% of the business.
Synchrony Financial (NYSE: SYF): SYF is a 0.37% of the portfolio position bought in the second quarter of 2017 at prices ranging from $ 26.50 to $ 34.50 and rose in the following Quarter by ~ 20% at prices between $ 28.50 and $ 31.25. The stock is now at $ 34.21.
Note: Synchrony is GE's private label credit card spin-off, trading at $ 23 per share in August 2014. Recently, the interest of major investors has changed: The Baupost Group has a share of about 10%.
Restaurant Brands International (NYSE: QSR): QSR is 0.25% of the 13F portfolio position that was introduced in the fourth quarter of 2014 at prices ranging from $ 35 to $ 42. The stock is currently trading at $ 56.31, well above this range. It started trading in December 2014 after a merger / renaming between Tim Hortons and Burger King Worldwide.
Note: Berkshires share in the business is ~ 4.2%.
STORE CAPITAL (NYSE: STOR): The 0.25% STOR stake was established in Q2 2017 in a private placement transaction at $ 20.25 per share. The stock is now at $ 25.52.
Costco Wholesale (NASDAQ: COST), Johnson & Johnson (NYSE: JNJ), Liberty LiLAC Group (NASDAQ: LILAC), Mondelez International (NASDAQ: MDLZ), M & T Bank (NYSE: MTB ), MasterCard Inc. (NYSE: MA), Procter & Gamble (NYSE: PG), Torchmark Corporation (NYSE: TMK), United Parcel Service (NYSE: UPS), Verizon Communications (NYSE: VZ), Visa Inc. (NYSE : V) and Walmart Stores (NYSE: WMT): These are very small positions (less than about 0.5% of the portfolio) that remained stable this quarter.
Note 1: Since November 2015, Warren Buffett is known to own ~ 8% of Seritage Growth Properties (NYSE: SRG) at a cost base of $ 36.50 in his personal portfolio. It is currently trading at $ 37.40. SRG is a REITS spin-off of Sears (NASDAQ: SHLD), which began trading in July 2015.
Note 2: Berkshire Hathaway also holds a 225M equity position in the BYD Company at a cost base of ~ $ 1 per share of ADRs – OTCPK: BYDDY). The ADR is currently trading at $ 13.68.
The following table shows the changes in Berkshire Hathaway's 13F holdings in the first quarter of 2018:
Disclosure:  I am / we are long BAC, GM.
I wrote this article myself and it expresses my own opinions. I do not receive any compensation for it (except from Alpha search). I have no business relationship with a company whose shares are mentioned in this article.
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