What's Warren Buffett’s Buying -- and Selling -- These Days?

With an avowed favorite holding period of “forever”, it’s always interesting when Warren Buffett’s Berkshire Hathaway decides to bail out on stocks in its investment portfolio. But even Oracles can lose patience. And Buffett lost plenty in the second quarter. Berkshire Hathaway (BRK.B) drastically reduced its holdings in Johnson & Johnson (JNJ), Kraft (KFT) and Procter & Gamble (PG).

Only Kraft has managed to nudge out the performance of the S&P 500 index over the past three years, as seen in this stock chart, but it’s on the verge of splitting into two separate entities this year.

JNJ Chart

JNJ data by YCharts

It’s not simply underperformance that likely sparked the moves. Buffett values quality management, and neither Procter & Gamble (see YCharts editor Betsy Morris’s takedowns Part One and Part Two of Procter & Gamble) or recall-plagued Johnson & Johnson has been a B-school “How To” case study of late.

The most interesting sale in Berkshire’s second-quarter 13-F filing was the closing out of its Intel (INTC) position. This was a holding initiated by Buffett investing consigliere Ted Combs in the third quarter of last year. It’s not common for Berkshire to invest for such a short-time frame, but there was indeed a nice profit to be booked….

INTC Chart

INTC data by YCharts

…and Intel’s value proposition -- driven by a rising PE ratio -- has clearly changed since the third quarter of 2011.

INTC PE Ratio Chart

INTC PE Ratio data by YCharts

To be clear, it’s not likely any of the Berkshire Hathaway sales were generated to raise cash, as Berkshire doesn’t seem to be in imminent need.

BRK.B Cash and ST Investments Chart

BRK.B Cash and ST Investments data by YCharts

Buffett has stated he likes keeping at least $20 billion on hand, so that leaves another $20 billion for deal making and investing.

More likely, these sales were simply because the team – Buffett, Combs and Ted Wechsler, the other investing lieutenant -- no longer saw a compelling value.

And it’s not like the team was only selling. Berkshire added to its already sizable stakes in Wells Fargo (WFC) and IBM (IBM); both of which are considered to be the result of Buffett’s direct trading hand.

The only new holding was a 2.8 million share investment in National Oilwell Varco (NOV), which looks like it was snagged on a second-quarter dip.

NOV Chart

NOV data by YCharts

Wechsler and Combs also added to some of their direct holdings, including DaVita(DVA), DirectTV (DTV), LibertyMedia(LMCA), and Viacom (VIA.B).

DVA Chart

DVA data by YCharts

For the quarter Berkshire’s the value of investment portfolio slumped slightly by $1 billion to $75.3 billion.

Carla Fried is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.



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