Warren Buffett 03 (May 15 - Dec 26)
Posted: Wed May 20, 2015 7:30 am‘Smart Money’ Stocks: Warren Buffett (Berkshire Hathaway)
We’ll start with the granddaddy of value investing, the eminent Mr. Warren Buffett himself.
While Buffett’s investing career is the stuff of legend, some of more recent picks have, shall we say, not lived up to the Buffett mystique.
As a case in point, consider International Business Machines Corp. (NYSE:IBM). Buffett added 2.6 million shares last quarter to his already large position in Big Blue.
He’s been steadily building the position since 2011, and it is now his third-largest holding after Wells Fargo & Co (NYSE:WFC) and The Coca-Cola Co (NYSE:KO). IBM now makes up about 12% of Berkshire Hathaway’s (NYSE:BRK.A, NYSE:BRK.B) stock portfolio.
For a man as astute as Buffett, IBM seems like an odd choice. Big Blue’s revenues have been in stark decline, dropping for 12 straight quarters on a trailing-12-month basis. That’s three years of shrinkage in a period when most of the world economy was growing.
IBM also has been levering its balance sheet to fund share repurchases. This has helped to keep EPS afloat, but in the absence of revenue growth it is mostly smoke and mirrors.
This is one guru trade I might avoid.
IBM aside, Buffett certainly hasn’t lost his mojo. The Oracle took advantage of the sell-off in all things energy related to snap up shares of crude oil transporter and refiner Phillips 66 (NYSE:PSX) on the cheap. Buffett boosted his position by 14% last quarter after increasing it by almost 6% in the fourth quarter of last year.
Phillips 66 trades for just 11 times earnings and yields a respectable — and growing — 2.8% in dividends. Phillips 66 grew its dividend by 12% last quarter and has nearly tripled it since mid-2012.
Source: Investor Place
We’ll start with the granddaddy of value investing, the eminent Mr. Warren Buffett himself.
While Buffett’s investing career is the stuff of legend, some of more recent picks have, shall we say, not lived up to the Buffett mystique.
As a case in point, consider International Business Machines Corp. (NYSE:IBM). Buffett added 2.6 million shares last quarter to his already large position in Big Blue.
He’s been steadily building the position since 2011, and it is now his third-largest holding after Wells Fargo & Co (NYSE:WFC) and The Coca-Cola Co (NYSE:KO). IBM now makes up about 12% of Berkshire Hathaway’s (NYSE:BRK.A, NYSE:BRK.B) stock portfolio.
For a man as astute as Buffett, IBM seems like an odd choice. Big Blue’s revenues have been in stark decline, dropping for 12 straight quarters on a trailing-12-month basis. That’s three years of shrinkage in a period when most of the world economy was growing.
IBM also has been levering its balance sheet to fund share repurchases. This has helped to keep EPS afloat, but in the absence of revenue growth it is mostly smoke and mirrors.
This is one guru trade I might avoid.
IBM aside, Buffett certainly hasn’t lost his mojo. The Oracle took advantage of the sell-off in all things energy related to snap up shares of crude oil transporter and refiner Phillips 66 (NYSE:PSX) on the cheap. Buffett boosted his position by 14% last quarter after increasing it by almost 6% in the fourth quarter of last year.
Phillips 66 trades for just 11 times earnings and yields a respectable — and growing — 2.8% in dividends. Phillips 66 grew its dividend by 12% last quarter and has nearly tripled it since mid-2012.
Source: Investor Place