Everything Warren Buffett: CNBC: Warren Buffett's Berkshire Hathaway Cuts Johnson & Johnson Stake By Half

Wednesday, February 18, 2009

CNBC: Warren Buffett's Berkshire Hathaway Cuts Johnson & Johnson Stake By Half

Warren Buffett's Berkshire Hathaway has just released its fourth quarter stock portfolio snapshot.

Instead of asking what Buffett has been buying, we should have been wondering what Buffett has been selling.

Most notably, Berkshire slashed its holdings in Johnson and Johnson [JNJ 55.98 -1.12 (-1.96%) ] to just 28.6 million shares as of December 31. That's a drop of almost 54 percent. It had reported holding 61.8 million shares as of the end of the third quarter on September 30.

That brings Berkshire's stake in J&J down to just under 4 percent from almost 8 percent.

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Johnson and Johnson's shares price fell almost 18 percent during the fourth quarter. We don't know whether Buffett avoided any or all of that drop since the filing doesn't say when the shares were sold. We do know that the stock is down another 6.4 percent year-to-date, a drop that Berkshire has avoided on the 33.2 million shares sold. Based on their December 31 close, those 33 million shares were worth about $2 billion.

Berkshire also made a sizable cut in its holdings of another healthcare company, Procter & Gamble [PG 50.11 -0.98 (-1.92%) ]. That stake fell 9 percent to 96.3 million shares from 105.8 million.

Berkshire's smaller cuts in Q4:

ConocoPhillips [COP 42.94 -2.73 (-5.98%) ] fell 4.8 percent to 79.9 million shares
CarMax [KMX 8.81 -0.07 (-0.79%) ] dropped 4.4 percent to 17.6 million shares
US Bancorp [USB 10.73 -1.67 (-13.47%) ] reduced by 7.4 percent to 67.6 million shares

Buffett wasn't just selling in the fourth quarter. Berkshire increased these holdings:

NRG Energy [IR 16.30 -1.09 (-6.27%) ] soared 44 percent to 7.2 million shares
Ingersoll-Rand [IR 16.30 -1.09 (-6.27%) ] increased by 38.1 percent to 7.8 million shares
Eaton [ETN 42.04 -1.76 (-4.02%) ] jumped by 10 percent to 3.2 million shares

And there's one new stake: about 8.7 million shares of Nalco Holding. [NLC 11.06 -0.66 (-5.63%) ]

On its web site, the company describes itself as "the leading integrated water treatment and process improvement company in the world."

At today's closing price of $11.06, the Nalco stake is worth just $96 million. (The stock is getting a 6 percent boost in after-hours trading.)

And Buffett is holding tight on his big financial holdings, including stakes in American Express [AXP 13.96 -1.78 (-11.31%) ] and Wells Fargo [WFC 13.69 -2.07 (-13.13%) ].

Overall, the dollar value of Berkshire's disclosed stock portfolio fell 25.8 percent to just under $52 billion as of December 31, down from almost $70 billion on September 30.

Our Berkshire Hathaway Portfolio Tracker shows the portfolio holdings as of December 31 are worth $41.4 billion, using today's closing prices

So what happened to Buffett's high-profile call last October to buy U.S. stocks? He said then he was buying domestic equities for his personal account. Apparently he felt Berkshire's money could be put to better use elsewhere. One alternative we know about are Berkshire high-interest rate loans to well-known companies facing tough times, such as Tiffany, Swiss Re, Harley-Davidson, Goldman Sachs, and General Electric.

Bloomberg quotes Buffett-style investor Mohnish Pabrai as saying before the portfolio filing, "Buffett has shown a preference over the past couple years toward buying whole companies, the debt markets or other private deals."

That's certainly evident in today's filing.

Here are the details from tonight's Berkshire Hathaway portfolio snapshot as of December 31, compared to the filing for September 30.

ADDED STAKES

Constellation Energy added at 19,894,322 shares. Berkshire obtained these shares in mid-December as part of its break-up fee after Constellation agreed to be acquired by Électricitié de France and canceled its tentative deal with Berkshire's MidAmerican Energy Holdings. Subsequent filings show that Berkshire sold over five million shares in January and early February, bringing its holdings down to 14,831,107 shares as of February 6.
[CEG 24.27 -0.87 (-3.46%) ]
Nalco Holding added at 8,739,100 shares.
[NLC 11.06 -0.66 (-5.63%) ]

INCREASED STAKES

Burlington Northern increased 9.9% to 70,089,829 shares from 63,785,418 shares.
(Berkshire reported holding 76,777,029 shares as of January 30.)
[BNI 62.94 -3.10 (-4.69%) ]
Eaton Corp. stake increased 10.0% to 3,200,000 shares from 2,908,700 shares. Eaton was a new holding as of the end of the third quarter.
[ETN 42.04 -1.76 (-4.02%) ]
Ingersoll-Rand stake increased 38.1% to 7,782,600 shares from 5,636,600 shares.
[IR 16.30 -1.09 (-6.27%) ]
NRG Energy stake increased 44.0% to 7,200,000 shares from 5,000,000 shares. The stake was also up in the third quarter, increasing by 54.4%.
[NRG 19.88 -2.44 (-10.93%) ]

DECREASED STAKES

Carmax stake decreased 4.4% to 17,636,500 shares from 18,444,100 shares from 21,300,000 shares.
[KMX 8.81 -0.07 (-0.79%) ]
ConocoPhillips stake decreased 4.8% to 79,896,273 shares from 59,688,000 shares.
[COP 42.94 -2.73 (-5.98%) ]
Johnson & Johnson stake decreased 53.7% to 28,611,591 shares from 61,754,448 shares.
[JNJ 55.98 -1.12 (-1.96%) ]
Procter & Gamble stake decreased 9.0% to 9,530,990 shares from 105,847,000 shares.
[PG 50.11 -0.98 (-1.92%) ]
US Bancorp stake decreased 7.4% to 67,551,426 shares from 72,937,126 shares. [USB 10.73 -1.67 (-13.47%) ]
UnitedHealth Group stake decreased 1.3% to 6,300,000 shares from 6,379,900 shares. [UNH 28.42 -0.54 (-1.86%) ]
Wells Fargo stake decreased 0.1% to 290,244,868 shares from 290,407,668 shares. [WFC 13.69 -2.07 (-13.13%) ]

UNCHANGED STAKES

American Express unchanged at 151,610,700 shares.
[AXP 13.96 -1.78 (-11.31%) ]
Bank of America unchanged at 5,000,000 shares. The stake had dropped 45.1% in the third quarter.
[BAC 4.90 -0.67 (-12.03%) ]
Coca-Cola unchanged at 200,000,000 shares.
[KO 42.60 -1.25 (-2.85%) ]
Comcast unchanged at 12,000,000 shares.
[CMCSA 12.89 -0.77 (-5.64%) ]
Comdisco unchanged at 1,538,377 shares.
[CDCO 7.50 0.25 (+3.45%) ]
Costco Wholesale unchanged at 5,254,000 shares.
[COST 42.12 -0.64 (-1.5%) ]
Gannett unchanged at 3,447,600 shares.
[GCI 4.02 -0.17 (-4.06%) ]
General Electric unchanged at 7,777,900 shares.
[GE 10.81 -0.63 (-5.51%) ]
GlaxoSmithKline unchanged at 1,510,500 shares.
[GSK 33.42 -1.56 (-4.46%) ]
Home Depot unchanged at 3,700,000 shares.
[HD 19.94 -1.28 (-6.03%) ]
Iron Mountain unchanged at 3,372,200 shares.
[IRM 19.68 -0.73 (-3.58%) ]
Kraft Foods unchanged at 138,272,500 shares.
[KFT 24.72 -0.48 (-1.9%) ]
Lowes Companies unchanged at 6,500,000 shares.
[LOW 17.07 -0.73 (-4.1%) ]
M&T Bank unchanged at 6,715,060 shares.
[MTB 35.00 -1.91 (-5.17%) ]
Moody's unchanged at 48,000,000 shares.
[MCO 22.90 -0.97 (-4.06%) ]
Nike unchanged at 7,641,000 shares.
[NKE 41.94 -1.49 (-3.43%) ]
Norfolk Southern unchanged at 1,933,000 shares.
[NSC 35.67 -2.06 (-5.46%) ]
Sanofi Aventis unchanged at 3,903,933 shares.
[SNY 29.01 -1.01 (-3.36%) ]
SunTrust Banks unchanged at 3,204,600 shares.
[STI 7.11 -1.61 (-18.46%) ]
Torchmark unchanged at 2,823,879 shares.
[TMK 26.54 -0.95 (-3.46%) ]
USG unchanged at 17,072,192 shares.
[USG 6.67 -0.40 (-5.66%) ]
Union Pacific unchanged at 8,906,000 shares.
[UNP 40.81 -2.70 (-6.21%) ]
United Parcel Service unchanged at 1,429,200 shares.
[UPS 42.95 -1.89 (-4.21%) ]
Wabco Holdings unchanged at 2,700,000 shares.
[WBC 11.41 -1.07 (-8.57%) ]
Wal-Mart Stores unchanged at 19,944,300 shares.
[WMT 48.24 1.71 (+3.68%) ]
Washington Post unchanged at 1,727,765 shares.
[WPO 400.30 -14.45 (-3.48%) ]
Wellpoint stake unchanged at 4,777,300 shares.
[WLP 41.89 -1.86 (-4.25%) ]
Wesco Financial unchanged at 5,703,087 shares.
[WSC 277.00 -21.00 (-7.05%) ]