How to Tell if Your Fund Invests With Buffett
Fund portfolio and Berkshire Hathaway shareholder data show which funds hold significant chunks of the company's stock.
Note: This article is part of Morningstar's coverage of the 2014 Berkshire Hathaway Annual Meeting. An earlier version of this article appeared May 1, 2013.
Fund investors, you may be investing with Warren Buffett and not even know it. The investing legend's firm, Berkshire Hathaway (BRK.A) (BRK.B), which holds its annual meeting Saturday, can be found in many mutual fund portfolios. Of course, unlike many of the individual company names found in fund portfolios, investing in Berkshire is almost akin to investing in another fund. The firm owns outright or invests in scores of companies, from giants such as the Burlington Northern Santa Fe to small businesses such as The McDowell News newspaper in Marion, N.C. (estimated population: 7,964).
Owning Berkshire Hathaway offers fund managers one-stop-shopping access to a diversified portfolio of companies, all vetted by Buffett and based on his classic value-oriented approach. It's almost like having Buffett as a subadvisor on the fund, not that your fund manager is likely to admit that.
To determine whether Berkshire Hathaway is a significant holding in your fund's portfolio, just go to an individual fund's Quote page on Morningstar.com, click on the Portfolio tab, and select the Holdings link, where you'll see a list of the fund's 25 largest holdings. Premium Members can click on the Premium Details link to drill down further.
Another option is to use the Instant X-Ray tool or the X-Ray tool in Portfolio Manager and click on the (Stock) Intersection link to see whether Berkshire Hathaway makes up a substantial portion of your holdings. If it does, you're in good company. Berkshire makes up 5% or more of the portfolios of several funds, and others aren't far behind. Fidelity Contrafund (FCNTX), one of the largest stock funds available in terms of assets, lists Berkshire Hathaway as its second-largest holding (behind only Google (GOOG)) at about 4% of the portfolio. Given the fund's size, it is also among the largest holders of Berkshire Hathaway stock, owning about 1.6% of the company.
To find other funds with significant portions of their assets invested in Buffett's firm, simply click on the Ownership tab on the Berkshire Hathaway Quote page on Morningstar.com and then select the Concentrated Owners link. The list you'll find includes a handful of funds Morningstar analysts recommend. Below is a sampling of funds that have significant concentrations in Berkshire's A shares. Note that Berkshire's B shares have different Concentrated Owners, though there is some overlap with the A shares.
Perhaps the best-known of the Buffett-style funds (and one Buffett himself referred investors to after closing his own investment partnership in 1969), this Gold-rated fund, which is currently closed to new investors, has become somewhat less concentrated in recent years and now holds more than 40 stocks in its portfolio. Turnover remains low at just 2%. Berkshire is the fund's third-largest holding at 7% of the portfolio (as of the end of 2013), behind Valeant Pharmaceuticals International (VRX) and clothing retailer TJX Companies (TJX). In years past, Berkshire had made up as much as 37% of the fund's holdings (in 2004). Fund managers Bob Goldfarb and David Poppe, Morningstar's Domestic-Equity Fund Managers of the Year in 2010, place a greater emphasis on company management than does Buffett. At the end of last year, the fund was heavy in financial-services, health-care, and industrials stocks while holding 18% of its assets in cash, well above the large-blend category average of 2%
Davis NY Venture (NYVTX)
Inspired as much by Warren Buffett and Charlie Munger as their firm's founder Shelby Davis, the managers here prefer undervalued stocks but will tolerate higher valuations if they believe companies' business models justify it, says Morningstar fund analyst Dan Culloton. They use bottom-up research to find well-managed, competitively advantaged companies with the wherewithal and will to reinvest capital profitably and whose shares are trading below what the managers think they are worth. Morningstar recently downgraded its Analyst Rating for the fund to Bronze from Gold following the the departure of longtime comanager Ken Feinberg at the end of last year. However, comanager Chris Davis remains and Feinberg's replacement, Danton Goei, is a seasoned veteran. The fund's top holdings include Google, Bank of New York Mellon (BK), American Express (AXP), and Berkshire Hathaway, at around 5% of the portfolio. The fund may charge a load, but a similar no-load option, Selected American Shares (SLADX), is available without a sales charge.
Adam Zoll does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.