InvestIdeas

Buffett unbound

NEW YORK - WARREN Buffett's train has left the station, and millions of investors are joining him for the ride.

The billionaire investor's Berkshire Hathaway Inc on Friday completed its roughly US$26.4 billion (S$37 billion) purchase of Burlington Northern Santa Fe Corp, issuing new stock and paying out US$15.87 billion of cash.

Berkshire is also replacing the No. 2 US railroad company in the Standard & Poor's 500 index of large US companies. It will begin trading on that index on Tuesday.

More than US$1 trillion of investor money tracks the index, and the addition of Omaha, Nebraska-based Berkshire is expected to generate about US$14 billion of buying demand.

Yet these new investors are buying into a roughly US$173 billion behemoth, more Fruehauf than Ferrari, that owns some 80 businesses selling things from Geico car insurance to Dairy Queen ice cream to Fruit of the Loom underwear. Berkshire also owns tens of billions of dollars of blue-chip stocks.

'It's a prudent retirement investment, but results of the past are not going to be repeated,' said Justin Fuller, author of the Buffettologist.com blog. 'It will probably do better than the S&P 500, but only slightly. That's a function very much of its size.'

Source: REUTERS

Who say Buffett is a buy and hold? Looks like he is trading?


Berkshire reveals several changes in investments
Buffett's company reduced stakes in J&J, Proctor & Gamble and Exxon during 4Q of last year

By Josh Funk, AP Business Writer , On Tuesday February 16, 2010, 6:52 pm EST

OMAHA, Neb. (AP) -- Billionaire Warren Buffett's company reduced its holdings in Johnson & Johnson, Proctor & Gamble, ConocoPhillips and Exxon Mobil Corp. during the last three months of 2009, according to documents filed Tuesday.

Berkshire Hathaway Inc. disclosed those moves and several other changes to its roughly $58 billion U.S. stock portfolio in documents filed with the Securities and Exchange Commission. The filing offers a snapshot of the Omaha-based company's holdings as of Dec. 31.

Berkshire added to its stakes in Iron Mountain Inc., Becton Dickinson & Co., Republic Services Inc. and Wells Fargo.

But the filing also said Berkshire has received permission from the SEC to omit some information to protect its trading strategy, so the document offers an incomplete picture.

Berkshire regularly asks the Securities and Exchange Commission for the ability not to immediately disclose its holdings when it is making significant investment changes. Berkshire says the information could hurt its trading strategy because the market likes to follow what the "Oracle of Omaha's" company does.

Berkshire officials did not immediately respond to a request for comment Tuesday afternoon, but they also don't typically comment on their stock holdings beyond what the company is legally required to disclose.

After buying more than 8 million shares of Johnson & Johnson during the first half of 2009, Berkshire sold off 9.8 million shares in the fourth quarter. So Berkshire held 27.1 million shares of the New Brunswick, N.J.-based drug and medical products maker at the end of the year.

Berkshire sold off 8.8 million shares of consumer products giant Proctor & Gamble during the fourth quarter, leaving Buffett's company with 87.5 million shares.

Berkshire also sharply reduced its holdings in oil producers ConocoPhillips and Exxon. Berkshire held 37.7 million shares of ConocoPhillips on Dec. 31 after selling 19.7 million shares. The smaller Exxon stake Berkshire first revealed last fall was cut from 1.3 million shares to 421,800 shares at year end.

Berkshire more than doubled its stake in Iron Mountain to 7 million shares of the Boston-based data- and document-storage company.

Berkshire increased its stake in Franklin Lakes, N.J.-based Becton Dickinson to 1.5 million shares. Previously, Berkshire held 1.2 million shares of the maker of medical devices and lab equipment.

Berkshire's investment in Phoenix-based waste hauler Republic Services grew to 8.3 million shares at year end from 3.6 million at the end of September.

Berkshire said in a separate filing Tuesday that it held 342.2 million Wells Fargo shares, giving it control of 6.7 percent of the bank. That's up from the 312.4 million Wells Fargo shares Berkshire held a year ago.

The filings do not differentiate between investments Berkshire makes, investments any of nearly 80 subsidiaries make, or investments Buffett himself makes.

In addition to its investments, Berkshire owns clothing, furniture, jewelry and corporate jet firms, but its insurance and utility businesses typically account for more than half of the company's revenue.

Source: YAHOO

It's no secret Buffett trades as well. But his buy and hold investments give huge dividends, which are seldom talked about!

That's why he's the ORACLE - he can both trade and invest very successfully.

HEHE......... buy and hold when the trend is UP, trade when the trend is Sideway or Down.

10 investing basics from Buffett

The Oracle of Omaha became one of the world's richest people by adhering to simple but critical tenets. Here are his rules for smart living and savvy investing.

By Michael Brush

My tour of the essence of Buffett's wisdom starts with the simple psychological lessons taught by the master, many of which are applicable in life outside investing.

Lesson No. 1: Be frugal
Lesson No. 2: Wait for the 'fat pitch'
Lesson No. 3: Be a contrarian
Lesson No. 4: Stick with what you know
Lesson No. 5: Don't depend on others to say you're right
Lesson No. 6: Buy companies cheap
Lesson No. 7: Look for companies with economic moats
Lesson No. 8: Buy big, concentrated positions
Lesson No. 9: Hold for life
Lesson No. 10: Believe in America

http://articles.moneycentral.msn.com/le ... spx?page=2

Lesson No. 10: Believe in America

better to believe in God ! if history is to repeat itself...what's america.. it could well be just another country in decades and centuries to come...

K,

You brought up a very good point against 'Lesson No. 10'

If WB did believe in America, why did he embark on some currencies and other forms of hedges some years back?

After all, why hedge, if US is the best place to put the money?

winston wrote:10 investing basics from Buffett

Lesson No. 9: Hold for life
http://articles.moneycentral.msn.com/le ... spx?page=2

Another one of those BS pieces that is written for the sake of generating an article.

HOLD FOR LIFE?? Does WB REALLY hold ALL HIS POSITIONS for life?? I bet the author never read "TRADE LIKE WARREN BUFFET"

author of the above article is Michael Brush...

soon, he will be Brushed aside ....

THE MANY MYTHS OF WARREN BUFFETT

Buffett likes for you to think that he just picks up an SEC filing, makes a phone call and seals the deal before he purchases a stock (and Wall Street wants you to think this as well), but Buffett is far more savvy than he leads on.

This is exemplified by the complexity of Berkshire Hathaway. Berkshire Hathaway isn’t just your average insurance company. The brilliance behind Buffett’s investment in Berkshire is astounding. He effectively used (and uses) Berkshire as the world’s largest option writing house.

The premiums and cash flow from his insurance business created dividends that he could invest in other businesses. But Buffett wasn’t just buying Coca-Cola and Geico as many have been led to believe. Buffett was placing some (short-term AND long-term) complex bets in derivatives markets, options markets, and bond markets.

The myth that Buffett is a pure value investor is just that. And it has been fed to the public hook line and sinker by people who entirely fail to understand Buffett’s genius, but benefit from an investing pubic that continues to pour money into the “hold and hope” myth.

Berkshire has grown into one of the most complex financial businesses in the world. The investment portfolio he has become famous for is the equivalent of just about 25% of Berkshire’s market cap. His most famous holdings (Coke, American Express & Washington Post) account for roughly 10% of the total market cap.

Interestingly, two of Buffett’s most famous investments weren’t traditional value picks at all, but distressed plays. His original investments in American Express and Geico occurred when both companies were teetering on the edge of insolvency. These deals are more akin to what many modern day distressed debt hedge fund managers do – NOT what Bill Miller and other “value” players do.

http://pragcap.com/the-many-myths-of-warren-buffett