Berkshire Hathaway filed its 13F with the SEC on Valentine’s day and revealed a huge purchase in shares of Apple Inc (Nasdaq: AAPL). What investors aren't talking about is the six other stock purchases the Oracle of Omaha made in the fourth quarter.
Berkshire Hathaway's 7 Largest Purchases
On February 14th, Warren Buffett's firm Berkshire Hathaway filed its quarterly Form 13F regulatory filing. I reviewed the filing to gain a glimpse into the firm's large portfolio.
Berkshire Hathaway's stock portfolio totals $191.2 billion according to the latest filing. The list value of stock holdings is up 7.6% when compared to the last quarter. As a benchmark, the S&P 500 was up 6.1% over the same period.
Quarter-over-Quarter Turnover (QoQ Turnover) measures the level of trading activity in a portfolio. Berkshire Hathaway's QoQ Turnover for the latest quarter was 4.1%. This is not surprising considering Buffett is a long-term investors that prefers to hold shares of a company for an extended period of time.
The ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed below at the Berkshire Hathaway page. The following table summarizes the firm's largest stock purchases determined by comparing the last two 13F filings:
|Ticker||Name||Purchased ($mil)||% Of Portfolio|
|Nasdaq: AAPL||Apple Inc.||$5,286.9||14.6%|
|NYSE: BK||Bank of New York Mellon Corp||$570.3||1.7%|
|NYSE: AXTA||Axalta Coating Systems Ltd||$438.4||0.4%|
|Nasdaq: LBTYA||Liberty Global PLC||$375.9||0.4%|
|NYSE: TEVA||Teva Pharmaceutical Industries Ltd||$357.7||0.2%|
|NYSE: MON||Monsanto Company||$331.1||0.7%|
|Nasdaq: LBTYK||Liberty Global PLC||$120.6||0.1%|
The largest stock purchase for the quarter was Apple. Berkshire Hathaway increased its position in the company by $5.3 billion and the stock now represents 14.6% of the firm's portfolio. However, value investors who track every move that Warren Buffett makes are speaking very little of the six other stock additions he made in the quarter.
Bank of New York Mellon Corp (NYSE: BK)
The second largest stock purchase was Bank of New York Mellon. Berkshire Hathaway increased its position in the company by $570.3 million. The bank now representing 1.7% of Mr. Buffett's portfolio.
The bank provides financial products and services to institutions, corporations, and high net worth individuals in the United States and internationally. Shares of the financial institution are up 7.1% over the last three months.
Axalta Coating Systems Ltd (NYSE: AXTA)
Warren Buffett's third largest stock purchase was Axalta Coating Systems. The investment manager increased its position in the company by $438.4 million.
The company manufactures and distributes coatings primarily for the transportation industry. Axalta Coating Systems' stock currently trades at $30.78 per share as of Tuesday morning, down -8.9% over the last three months.
Finbox.io applies pre-built valuation models to calculate a fair value for a given stock and uses consensus Wall Street estimates for the forecast when available.
|Analysis||Model Fair Value||Upside (Downside)|
|10-yr DCF EBITDA Exit||$31.54||2.5%|
|5-yr DCF EBITDA Exit||$38.34||24.6%|
The company's average fair value of $34.94 implies 13.5% upside and is calculated from 2 separate analyses as shown in the table above. Berkshire may have been looking at similar analyses when making their investment decisions.
Liberty Global PLC (Nasdaq: LBTYA)
Liberty Global's class A shares were the next largest addition by Berkshire Hathaway. In fact, the firm's purchase of the company's equity equaled $496.5 million when considering both class A and class C shares. Warren Buffett now owns more than $1 billion worth of the company's total equity.
Liberty Global provides video, broadband internet, fixed-line telephone, mobile, and other communications services to residential customers and businesses in Europe. The company's class A shares are trading 9.9% higher over the prior three months. The class C shares are also up the same amount.
Teva Pharmaceutical Industries Ltd (NYSE: TEVA)
The next largest stock purchase was Teva Pharmaceutical Industries Limited which was actually a new position made by the investment manager. Berkshire bought a new $357.7 million stake in the company representing a small 0.2% of the firm's portfolio.
Teva Pharmaceutical develops, manufactures, and distributes generic medicines and a portfolio of specialty medicines worldwide. The pharma company's stock currently trades at $20.49 per share as of Tuesday February 20th, up a significant 59.8% over the last three months.
In addition, finbox.io's average fair value estimate of $26.38 implies another 28.8% upside and is calculated from 6 valuation models as shown in the table below. Each analysis uses consensus Wall Street estimates for the projections when available.
|Analysis||Model Fair Value||Upside (Downside)|
|10-yr DCF Revenue Exit||$28.15||37.4%|
|5-yr DCF Revenue Exit||$31.19||52.2%|
|10-yr DCF Growth Exit||$25.99||26.9%|
|5-yr DCF Growth Exit||$28.09||37.1%|
|Dividend Discount Model (multi-stage)||$25.52||24.6%|
|Earnings Power Value||$19.37||-5.5%|
On a fundamental basis, the company's stock appears to be trading at a steep discount to finbox.io's intrinsic value estimate. Maybe worth taking a closer look at Teva.
Monsanto Company (NYSE: MON)
The sixth largest stock purchase for the quarter was Monsanto Company. Berkshire Hathaway increased its position in the company by $331.1 million and now holds $1.4 billion worth of shares according to the latest 13F filing.
Monsanto provides agricultural products for farmers worldwide. Shares of the company are up 2.3% over the last three months.
There are several benefits of mimicking Berkshire Hathaway holdings. He historically has very low portfolio turnover - so he only invests when he feels a high degree of conviction in management’s ability to deliver on stated objectives. Furthermore, if one of his investments hits a hiccup, he can deploy Berkshire’s multi-billion cash war chest.
If things go really really wrong, he is not shy about leveraging his stellar reputation to work through the problems. (See Solomon Brothers, Bank of America, other scandals).
Author: Andy Pai
Expertise: financial modeling, mergers & acquisitions
Andy is also a founder at finbox.io, where he's focused on building tools that make it faster and easier for investors to do investment research. Andy's background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights:
- Sears Holdings Corp.'s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores.
- Cerberus Capital Management's $3.3 bn acquisition of SUPERVALU Inc.'s New Albertsons, Inc. assets.
Andy can be reached at [email protected].
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.