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The 38 Stocks in the Buffett Portfolio

Public filings tell us what the Oracle of Omaha's company is buying.

Justin Fuller, 06/06/2006

Periodically, we review the stock holdings of Berkshire Hathaway BRK.B, the investment conglomerate run by Warren Buffett, one of the all-time great investors.

Each quarter, Berkshire files form 13-F, which discloses its consolidated equity investments, with the SEC. Berkshire's latest 13-F disclosed 36 stock positions as of March 31, and we add two foreign investments we know of, for a total of 38. Berkshire now owns three more stocks than it did at the end of 2005, and nine more than it did at the end of 2004. We note that Berkshire doesn't have to disclose its foreign investments because it owns the local shares, not the U.S. ADRs.

New Additions
At Berkshire Hathaway's annual meeting last month, Buffett said that if he were starting his investment partnership over again, he would be investing in securities around the world and would focus on smaller companies. While Berkshire's large size--the investment conglomerate has more than $30 billion in cash--constrains Buffett's ability to deploy cash into smaller stocks, we think that Berkshire's recent purchases of ConocoPhillips COP, General Electric GE, and United Parcel Service UPS indicate a preference for companies with global operations.

We also know that Berkshire recently acquired a stake in U.K.-based retailer Tesco PLC. These public investments coincide with Berkshire's proposed acquisition of Israel-based Iscar Metalworking Companies for $4 billion. Taken together, we estimate that Berkshire has added almost $6 billion of "nondollar" assets to its holdings over the past few months. We aren't surprised by this, given Buffett's continued belief that large U.S. trade deficits will eventually cause the dollar to weaken.

In addition to these new investments, Berkshire increased its stake in Wells Fargo WFC, buying a hefty 7.5 million more shares over the first three months of the year. We estimate that Berkshire's average purchase price for the additional Wells Fargo shares was about $61 per share. Berkshire also modestly increased its stakes in American Standard Companies ASD and Comdisco Holdings CDCO.

Eliminations and Reductions
While Buffett typically employs a buy-and-hold approach, Berkshire does occasionally sell or reduce the size of certain positions. For example, Berkshire recently liquidated its position in Mueller Industries MLI for what we suspect was a tidy profit, given that Mueller's share price increased by about 30% over the first three months of the year.

Moreover, we note that Berkshire began to divest its stake in Ameriprise Financial AMP, which it had acquired when longtime holding American Express AXP spun off the unit in September. We had suspected that Berkshire would start selling its Ameriprise stake, as the unit's middling results had long been a drag on American Express' overall returns. To date, Berkshire has sold only about $6.4 million Ameriprise shares--about 0.50% of its position--but we think that the investment conglomerate may continue to trim its Ameriprise stake over time.

Berkshire also reduced its stake in H&R Block HRB, Home Depot HD, Iron Mountain IRM, Lexmark LXK, Sealed Air SEE, and ServiceMaster SVM. At this point, none of these sales appears to be significant.

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