Buffett targets cars, oil and satellite TV

August 16, 2013 12:00 am

Buffett targets cars, oil and satellite TV

By Dan McCrum in New York

Warren Buffett put money to work in cars, oil and satellite television in the second quarter as the chief executive of Berkshire Hathaway and his deputies invested the most money in stocks since 2011, according to regulatory filings. Berkshire increased its holdings in General Motors, the carmaker recovering from bankruptcy and a government bailout, and made two new investments: in Dish Network, the broadcaster controlled by Charles Ergen, and Suncor Energy, a Canadian oil company. The billionaire investor, for decades a proponent of the long-term attractions of stocks, made the investments in a period when the US stock market surpassed its previous high set in 2007. The rising market helped push the value of Berkshire’s stock portfolio to $97bn on Thursday, accounting for more than a third of the conglomerate’s $287bn market capitalisation.Mr Buffett has built the company over five decades, amassing a confectionery-to-rail collection of businesses, attached to the core insurance business.

He prides himself on investing the insurance premiums collected over time, known as the “float”, and aims to grow the underlying book value of his business empire faster than the S&P 500. However, in his widely read letter to shareholders this year he chastised himself for subpar performance, and if Berkshire expands slowly this year he risks being beaten by the US market over a five-year period for the first time.

Mr Buffett now controls 40m GM shares worth $1.4bn, up from 25m at the end of the first quarter. Berkshire also disclosed that at the end of June it owned more than 17.8m Suncor shares worth more than $500m.

The new stake in Dish adds to Berkshire’s media holdings, as it already owns 6.8 per cent of DirecTV, worth $2.3bn, in addition to holdings in the Washington Post Company, and Liberty Media. However, the small size of the Dish investment, at $23m, suggests it is the responsibility of one of Mr Buffett’s two investment deputies, Todd Combs and Ted Weschler.

Mr Buffett also added slightly to his largest holding, in Wells Fargo, taking Berkshire’s stake to 8.7 per cent of the consumer bank, worth $20bn.

Berkshire reduced some holdings, exiting a stake in newspaper publisher Gannett, while reducing investments in Kraft and Mondelez, the snack group it spun out last year.

Berkshire’s biggest holdings are mostly consumer-facing groups with strong brands, including Coca-Cola, American Express and Procter & Gamble. The exception is Berkshire’s one technology holding, a $13bn stake in IBM.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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