Buffett's Biggest Investments
Not only does Berkshire Hathaway have $US116 billion of cash in its insurance group ‘float’ on hand to invest, but the market value of the company’s huge investment portfolio is now around $US170 billion following the run up in the stockmarket in the year to December, 2016, as well as more buying in key stocks such as Apple and taking up a stake in bank of America. That was up 39% from $US122 million at the end of 2016.
Most of the investment portfolio is in the insurance group - $US163.1 billion at the end of last year, up around $US30 billion from the $US134 billion at the end of 2016.
Berkshire’s 2017 annual report (http://www.berkshirehathaway.com/2017ar/2017ar.pdf) lists the top 15 investments in the portfolio. Warren Buffett said It excludes the Kraft Heinz holding – 325,442,152 shares – because Berkshire is part of a control group and therefore must account for this investment on the “equity” method not as a stockmarket investment.
On its balance sheet, Berkshire carries its Kraft Heinz holding at a figure of $US17.6 billion. The shares had a year end market value of $US25.3 billion, and a cost basis of $US9.8 billion.
According to mr Buffett, some of the stocks in the table are the responsibility of investment managers Todd Combs or Ted Weschler, "who work with me in managing Berkshire’s investments.”
"Each, independently of me, manages more than $12 billion; I usually learn about decisions they have made by looking at monthly portfolio summaries. Included in the $25 billion that the two manage is more than $8 billion of pension trust assets of certain Berkshire subsidiaries. As noted, pension investments are not included in the preceding tabulation of Berkshire holdings,“ Mr Buffett added.
From the stock portfolio Berkshire received $US3.7 billion of dividends in 2017.
Buffett said that approximately 65% of the aggregate fair value of the portfolio at December 31, 2017 was concentrated in five companies (American Express Company – $US15.1 billion, 17.6%; Apple Inc. – $US28.2 billion, 3.3%; Bank of America Corporation – $US20.7 billion, 6.8%; The Coca-Cola Company – $US18.4 billion, 9.4% and Wells Fargo & Company – $US29.3 billion, 9.9%). That is up from the position at the end of 2016 when around 60% of the aggregate fair value of the portfolio was concentrated in five companies (American Express Company – $US11.2 billion; Bank of America Corporation – $US14.5 billion; The Coca-Cola Company – $US16.6 billion; International Business Machines Corporation – $US13.5 billion and Wells Fargo & Company – $US27.6 billion).
In each of these companies, Berkshire is the single largest shareholder.
Apple is the single biggest change, followed by the disappearance of IBM (Berkshire’s investment manager’s filing earlier this month revealed it had sold most of its IBM holding in the December quarter, while adding to its Apple stake. The Bank of America position was created in the third quarter of last year.
Some of the Well Fargo holding was also sold and the investment in the bank, while large, is no longer one of his major holdings following the scandal and fines for management forcing staff to miss sell to customers more than 3.5 million accounts and 600,000 unneeded insurance policies. Berkshire and Buffett abandoned Wells Fargo because the US Federal Reserve refused to allow Berkshire to move past 10% of Wells without making more disclosures on loans and other financing deals.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.