Warren Buffett Berkshire Hathaway Portfolio Update: 13F Filing Q4 2008

Warren Buffett, the legendary investor and oracle from Omaha, has filed Berkshire Hathaway's 13F and we get a glimpse as to what he's been up to in these tumultuous markets. The man needs no introduction, but if you want to learn more about him: read his biography, its very insightful. The man is known for his buy and hold strategy and he has amassed some large stakes in great brands and great companies. This crisis has presented numerous opportunities in his eyes, as he has started buying American. He most recently bought bonds in Tiffany's and Harley Davidson. Earlier on, he got involved with Goldman Sachs and General Electric with large multi-billion dollar preferred purchases. Do you notice a theme yet? He sees opportunity in America. He sees opportunity in American brands and American companies. Heck, he had even mentioned possibly buying back Berkshire stock, which is the Warren Buffett brand in and of itself. But, enough about all his recent purchases that everyone already knows about. Let's get to the info revealed in the 13F.

To be honest, the changes to his portfolio were kind of lackluster. After all the Buffett activity we've seen lately, there's nothing massive to report. But, there have been some changes indeed. A while ago, we had mentioned that Buffett was selling puts on Burlington Northern. He was clearly drawing a line in the sand as to where he wanted to add to his already large position in BNI. And, that strategy worked out as he was assigned more BNI shares to add to his large pile.

The second (and arguably biggest) change to his portfolio would be the large position he picked up in Nalco (NLC). This is a brand new position for him and he has over 8.7 million shares. Nalco does a lot of water treatment among other things, so its interesting to see him step into this arena. We've been reading a lot recently about the impending clean water problems worldwide, and its safe to say that Buffett has as well.

The third most noticeable change would be in regards to his Johnson & Johnson (JNJ) position. He sold over half his position in this name from over 60 million shares down to around 28 million shares. If we were to wager a guess, we'd say that Buffett did so in a "selling when its the hardest to" kind of move. The right plays are usually the hardest to make. And, if you think about it, selling a consumer staples name in the heart of the recession is probably a tough play. But, it could very well be the right play, as more names could be attractive once we emerge from these difficult times. Who knows though, as that's just pure speculation on our part. For all we know, Buffett could simply be trading his 'safe' portfolio plays for a solid income stream of 10-15% interest, which he has garnered in some of his most recent deals. And, who wouldn't take that? Those were some sweet terms, so that would also make perfect sense. Additionally, he sold some of his Procter & Gamble (PG), another well known consumer staples name.

Buffett is the third name we've covered in our fourth quarter 2008 hedge fund portfolio tracking series. We're tracking a ton of prominent names and we invite you to check out what John Paulson and Carl Icahn were up to recently, as we've already covered their movements. Look for 35+ more hedge funds in our daily coverage.

Bottom line in all things Buffett: He started a new position in Nalco (NLC), and he picked up some more Burlington Northern (BNI), & NRG Energy (NRG) among others. He sold some Johnson & Johnson (JNJ), Procter & Gamble (PG), US Bancorp (USB), & Wells Fargo (WFC), among others.

Warren Buffett Buys Tiffany's and Harley Davidson Bonds

Somehow our post on this never got published, so we're going through and attaching the recent Tiffany's news as well. If you've missed it, Warren Buffett earlier was buying $300 million of Harley Davidson's (HOG) bonds in a private transaction. And, yet again, Buffett has secured an awesome deal for himself with ridiculous interest rates.

Now, much more recently, via ZeroHedge, we see that Buffett has bought $250 million worth of 10% Notes in Tiffany's (TIF) that mature in 2017 and 2019. Buffett has been busy buying American icon brands and if I were a wagering man I'd say that trend is likely to continue as he puts money to work in a time when he sees great opportunity. Hell, he had even mentioned possibly buying back Berkshire stock.

Warren Buffett Talks About Buying Back BRK.A Stock

Here's Buffett's interview with PBS, where he discusses possibly buying back Berkshire Hathaway (BRK.A) stock.




Also, we wanted to pass along a nice collection of past Buffett columns. Like the recent Warren Buffett is Buying American column, these .pdf's take you back through similar columns he has written during periods where stocks looked attractive to him.

And, lastly, don't forget to check out The Snowball: Warren Buffett and the Business of Life by Alice Schroeder. She was hand picked by Buffett to be his biographer and this is the result. Snowball turns you upside-down and inside-out within the world of all things Buffett. I recently read this and enjoyed it immensely.

Hedge Fund Activity / 13F

(Just FYI: This post marks the first of a series I will be doing this week that details what the "smart money" has been up to lately.)

Four times a year, hedge funds & asset managers with > $100 million AUM (assets under management) are required to report to the SEC their holdings from the previous quarter. I check these 13F filings quarterly just to get a sense as to where these funds are putting their money sector wise. If you just sit down and do some simple number crunching between last quarter's 13F and this quarter's 13F, you can see exactly where these funds have been moving their money.

Now, these 13F's should be treated as a lagging indicator simply because the 13F's that were just released May 15th 2008 show the funds' holdings as of March 31st 2008. So, in the past month and a half, they could have completely changed their portfolio. But, at the same time, its easy to see which sectors they are flocking to.

I like to specifically follow value based hedge funds in the hope that they won't experience ridiculously high turnover and thus allowing me to track their sector rotations. Specifically, I follow the Tiger Cubs (otherwise known as the proteges of former Tiger Management legend Julian Robertson). Many of these former proteges/right hand men have started their own funds and here are the ones I've been following:

- Blue Ridge Capital (John Griffin)
- Lone Pine Capital (Steve Mandel)
- Maverick Capital (Lee Ainslie)
- Viking Global (Andreas Halvorsen)

Additionally, I also like to follow the Commodities Corporation "offspring" which typically employ a global macro strategy.

- Tudor Investment Corp (Paul Tudor Jones)
- Moore Capital (Louis Bacon)
- Caxton Associates (Bruce Kovner)

So, I follow a core of value funds in depth and then I also follow a core of global macro funds in depth. Over the next week, I will be going into detail as to what those specific funds were up to this past quarter. Additionally, I like to follow other "whales" and funds that are not necessarily value based, but are still top performers on Wall Street. I won't be going into detail on some of these names, but I will provide some very useful links that give a broad overview of what some of these whales have been buying/selling. Because, after all, you've got to at least keep tabs on what these guys are doing:

- Warren Buffett (obviously)
- Carl Icahn (rabblerousing at its best)
- RBS Partners (Eddie Lampert)

Then, of course, there are some just straight up beastly funds which you have to keep an eye on due to their awesome returns over the years:

- Atticus Capital (Timothy Barakett)
- BP Capital (Boone Pickens)
- Greenlight Capital (David Einhorn)
- Paulson & Co (John Paulson)
- D.E. Shaw & Co (David E. Shaw)
- Jana Partners (Barry Rosenstein)

And, lastly, a few deep value & activist funds.

- Third Point (Daniel Loeb)
- Pershing Square (Bill Ackman)
- Okumus Capital (Ahmet Okumus)
- T2 Partners (Whitney Tilson)
- Tontine Partners (Jeffrey Gendell)

So, over the coming week I'll touch on some important position moves some of these funds/whales have made (new positions, removed positions, etc). And, specifically, I'll be looking in depth at some of my favorite funds on a quarter by quarter comparison. Here are the links to my in-depth analyses of said funds.

- Blue Ridge Capital
- Lone Pine Capital
- Maverick Capital
- BP Capital
- Atticus Capital