Business | Investment
Buffett increases stake in Kraft and Wells Fargo
Billionaire Warren Buffett's Berkshire Hathaway took advantage of falling share prices in the first quarter to boost stakes in Kraft Foods and Wells Fargo.
- Bloomberg
- Published: 23:39 May 16, 2008
New York: Billionaire Warren Buffett's Berkshire Hathaway took advantage of falling share prices in the first quarter to boost stakes in Kraft Foods and Wells Fargo.
Buffett also increased holdings in Ingersoll-Rand, the refrigeration-equipment maker, and health insurers UnitedHealth Group and WellPoint, according to a regulatory filing by Berkshire.
The Standard & Poor's 500 Index declined 9.9 per cent in the first three months of the year.
"If a stock goes down 50 per cent it doesn't bother me in the least,'' Buffett said earlier this month 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 holding company with a $72.6 billion stock portfolio by investing premiums from insurance units such as Geico and National Indemnity.
Berkshire is the largest shareholder of Coca-Cola, Wells Fargo, Kraft and American Express as of March 31, according to Bloomberg data.
Berkshire's holdings of Kraft, the world's second-biggest foodmaker, rose 4.4 per cent since December 31 to 138.3 million shares, according to the filing, which discloses US equity investments as of March 31. Kraft shares fell five per cent in the first quarter.
Berkshire's stake in Wells Fargo, the second-biggest US home lender, increased by 1.4 million shares to about 290.7 million. The bank averaged $29.74 on the New York Stock Exchange during the first quarter, about nine per cent lower than in the last three months of 2007, when Buffett increased Berkshire's ownership by 3.4 per cent.
Just the beginning
"He's putting more in the things he's invested in all along,'' said Frank Betz, a partner at Carret Zane Capital Management, which oversees $800 million including Berkshire shares in Warren, New Jersey. "We'll see more of that; why reinvent the wheel?''
The filing reported no new companies in the portfolio, unlike the prior quarter, when Berkshire disclosed having built a stake of more than $4 billion in Kraft, or last year, when the company revealed it became the largest shareholder in railroad Burlington Northern Santa Fe.
"His energies are totally focused on acquisitions and the debt markets right now,'' said Mohnish Pabrai, founder of Irvine, California-based Pabrai Investment Funds, who manages $600 million and holds Berkshire shares. "There's a lot of opportunity on the debt side because of liquidity drying up.''
Berkshire has spent $4 billion in the municipal auction-rate bond market, taking advantage of payouts that topped 10 per cent 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 per cent and 11 per cent.
"Those are extreme dislocations,'' Buffett said on May 3. "Those are great times to make unusual amounts of money.''
More from Investment
More from Business
Business Editor's choice
-
‘Wrong Way' Krugman
The source of our economic malfunction lies with government-mandated bank regulations
-
Greek exit could make Eurozone stronger
Departure will show limits of bailouts and allow remaining members to act much more like a unit
-
UAE upholds values of free trade
Recently released statistics confirm an established fact, namely that of the UAE embracing the free trade principle in general and imports in particular
