Billionaire Warren Buffett's Berkshire Hathaway Inc took advantage of falling share prices in the first quarter to boost stakes in Kraft Foods Inc and Wells Fargo & Co.
Buffett also increased holdings in Ingersoll-Rand Co, the refrigeration-equipment maker, and health insurers United Health Group Inc and WellPoint Inc, according to a regulatory filing yesterday by Nebraska-based Berkshire. The Standard & Poor's 500 Index declined 9.9 percent in the first three months of the year.
"If a stock goes down 50 percent it doesn't bother me in the least," Buffett said after Berkshire's annual shareholder meeting in Omaha. "If we're going to be buying things, we want to buy them on sale."
Buffett, 77, built Berkshire from a textile manufacturer into a 200-billion U.S. dollars holding company with a 72.6-billion dollars stock portfolio by investing premiums from insurance units such as Geico Corp and National Indemnity Co. Berkshire is the largest shareholder of Coca-Cola Co, Wells Fargo, Kraft and American Express Co as of March 31, according to Bloomberg data.
Berkshire's holdings of Kraft, the world's second-biggest food maker, rose 4.4 percent since December 31 to 138.3 million shares, according to the filing, which discloses United States equity investments as of March 31. Kraft shares fell 5 percent in the first quarter.
Wells Fargo
Berkshire's stake in San Francisco-based Wells Fargo, the second-biggest US home lender, increased by 1.4 million shares to about 290.7 million. The bank averaged 29.74 dollars on the New York Stock Exchange during the first quarter, about 9 percent lower than in the last three months of 2007, when Buffett increased Berkshire's ownership by 3.4 percent.
"He's putting more in the things he's invested in all along," said Frank Betz, a partner at Carret Zane Capital Management. "We'll see more of that. Why reinvent the wheel?"
The filing reported no new companies in the portfolio. "His energies are totally focused on acquisitions and the debt markets right now," said Mohnish Pabrai, founder of California-based Pabrai Investment Funds. "There's a lot of opportunity on the debt side because of liquidity drying up."
Extreme Dislocations
Berkshire has spent 4 billion dollars in the municipal auction-rate bond market, taking advantage of payouts that topped 10 percent after regular bidders fled, Buffett said at the annual meeting. Markets were so disrupted, he said, that bonds from the same issue were selling simultaneously from the same broker with yields of 6 percent and 11 percent.
"Those are extreme dislocations," Buffett said. "Those are great times to make unusual amounts of money."
Buffett will be in Europe next week meeting with owners of large family-run businesses as he looks to put 35 billion dollars of cash to work.
Berkshire added to its stakes in the two largest US health insurers in the first quarter as the shares fell. Holdings in Minnetonka, Minnesota-based United Health and in Indianapolis-based WellPoint increased by 6.7 percent each.
Buffett, the world's richest man according to Forbes magazine, is often mimicked by investors who follow his stock picks. Using that strategy for 31 years would have delivered annual returns of about 25 percent, double the return of the S&P 500, according to 2007 study. Berkshire earned 13.2 billion dollars in 2007.
Source: Shanghai Daily
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