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Market Update

Berkshire Continues to Shift Cash Elsewhere

Berkshire continued to sell legacy holdings in the fourth quarter to free up capital for investments in other names, most notably this week's acquisition of Heinz.

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 Berkshire Hathaway's (BRK.A) (BRK.B) fourth-quarter 13-F filing, which details the firm's equity holdings, continued to show evidence of the primary theme we've believed would drive portfolio movements over the near term. Ever since Berkshire appointed Ted Weschler and Todd Combs as investment managers, the firm has been fairly active about selling legacy positions as part of an ongoing process to raise capital for the two managers to invest.

The biggest sale during the period involved 28.8 million shares of  Kraft Foods Group (KRFT), which, by our estimates raised around $1.1 billion for the firm. At a little more than $75 million at the end of last year, Kraft is now one of the smallest holdings in Berkshire's equity portfolio, and we'd be surprised if the shares remained there much longer. As for the other sales during the period, Berkshire sold off another 165,000 shares of  Johnson & Johnson (JNJ), whittling its stake in the health-care firm down to less than $23 million at the end of the year. Much like with Kraft, we expect Johnson & Johnson to continue to be a source of cash for the managers at Berkshire. The only other sale during the fourth quarter involved Lee Enterprise (LEE), which is now the smallest holding in Berkshire's equity portfolio.

Greggory Warren does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.