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Investing Specialists

Eight 5-Star Stocks from Berkshire's Latest Holdings

Despite being a net seller in the second quarter, Berkshire made a few buys worth looking into.

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By Bill Bergman | Senior Stock Analyst

While  Berkshire Hathaway (BRK.A) (BRK.B) made only modest changes to its equity portfolio during the second quarter, based on data pulled from the firm's latest 13-F filing, the company was once again a net seller of equities during the period. We were, however, encouraged to find more than a handful of 5-star stocks in the company's most recent holdings. Earlier this year, we viewed Berkshire's portfolio as being flooded with buying opportunities for individual investors, as a review of the company's fourth-quarter filing uncovered 31 5-star stocks among Berkshire's equity holdings. By the time May rolled around, the number of stocks in the manager's first-quarter portfolio that were considered buyable by our analysts had dropped to 13, primarily due to the dramatic rise in equity prices since the beginning of March. As the market rally continued through the summer, the number of 5-star stocks in Berkshire's equity portfolio at the end of the second quarter had fallen to eight. We've highlighted these 5-star holdings in the table below and will delve more deeply into each of them as we discuss the moves made during the most recent quarter by this top manager.

Of the nine position changes in Berkshire's portfolio during the quarter, there was one new money purchase (where the company committed capital to a name it had not held previously) and what looks like one outright sale (where Berkshire completely eliminated a position in a security). The new money purchase,  Becton, Dickinson (BDX), was of big interest to the Ultimate Stock-Pickers team because it is a name we've highlighted several times in the last two months. As you may recall, Brad Meeks sat down in June with Alex Morozov, our analyst who covers the company (and is also the associate director for the Morningstar health-care team), to discuss the basis for his 5-star call on the firm. Alex Rambaldini sat down with Alex again at the end of July after Becton, Dickinson's stock took a hit following the firm's release of second-quarter earnings. Alex is still a big believer in the company and we're sure he was pleased to get additional support for his stance from the portfolio managers at Berkshire.

The Morningstar Ultimate Stock-Pickers Team does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.