So what is Warren Buffett up to – no, not with the $US37 billion Precision Castparts buy, but a new, intriguing stockmarket play which emerged from Berkshire Hathaway’s quarterly investment filing with the US Securities and exchange Commission on Saturday morning, our time.
The filing is required by the SEC from big fund managers, such as Berkshire Hathaway, but also hedge funds and other aggressive investors – George Soros and Carl Ichan were two others to file on Friday night.
While the changes in the Berkshire portfolios were small in the quarter to June, the most intriguing aspect of the filing was what was not revealed.
It included this line: “confidential information has been omitted from the public Form 13F report and filed separately with the U.S. Securities and Exchange Commission."
In the past, Buffett has used this exemption when he is buying a lot of shares in a company over a period of time and wants to prevent copycat buying from driving up the price.
That’s what he did in 2011 when Berkshire began buying IBM shares in March and didn’t publicly reveal the purchases until November after it had accumulated a stake worth almost $US11 billion.
US analysts say that Buffett has identified a major new play and is building a stake that will be released in three month’s time.
Berkshire’s filing did reveal some minor moves. It reported a new 20 million-share stake in Axalta Coating Systems, worth about $US600 million at Friday’s closing price. The company makes liquid and powder coatings for vehicles and industrial uses. In other words, it is an industrial company which is the current area of focus for Buffett and Berkshire.
But analysts and Buffett watchers point out that the size of this stake indicates the stock was chosen by one of Berkshire’s portfolio managers, not by Buffett himself.
The mystery buying is being overseen by Buffett himself because of its obvious size and sensitivity.
Berkshire increased its Charter Communications stake by 42% to around 8.5 million shares worth $US1.5 billion, a bigger punt on the emerging cable TV giant (it is in the process of a takeover of the much larger Time Warner Cable.
But lest people think Buffett is betting bigger on cable TV (its under pressure in the US), Berkshire again cut its holdings in Viacom by nearly a third (2.6 million shares). It is now worth around $US250 million and has cost Berkshire hundreds of millions of dollars in the past year with a 30% share price fall. Stakes in Twenty-first Century Fox, Liberty Media and Liberty Global were unchanged.
Relatively small stakes in oil groups, Phillips 66 and National Oilwell Varco were sold out completely. Six months ago Buffett sold out of his $US3.7 billion stake in ExxonMobil, ending a fairly long investment history, so obviously Buffett is right off oil and gas stocks at the moment.
There were no changes in Buffett’s “big four” holdings: Wells Fargo, Coca-Cola, American Express and IBM. And another big investment – the stake in Wal Mart was steady on 60.4 million shares.
Berkshire Hathaway said in the filing that the value of its equity holdings was $US107.18 billion at the end of June, up less than 0.1% from $US107.13 billion at the end of March. Over the same time, the S&P 500 slipped 0.2%.
