Berkshire Hathaway (BRK-B) just posted its 13-F filing with the SEC, which lists changes in its stock positions.
Buffett initiated a new position in medical technology company Becton Dickinson (BDX) in the second quarter. The sec filing shows Berkshire Hathaway purchased.1.20 million shares in Becton Dickinson (BDX). Becton Dickinson is a dividend aristocrat, which has raised distributions for 36 years in a row.
Berkshire added 4.4 million shares to its position in health care giant Johnson & Johnson (JNJ). This is the second consecutive addition to its holdings there. Johnson and Johnson (JNJ) is another dividend aristocrat, which has rewarded shareholders with 47 years of consecutive dividend increases. Check my analysis of the stock.
Those recent moves by Buffett reiterate my convictions that he is a closet dividend investor. Most companies that have managed to increase their dividends for long periods of time are ones that have wide moats as well as excellent competitive advantages in the marketplace. Having these qualities leads to rising earnings which tend to support a steady pace of increase in dividends.
Berkshire eliminated its position in utility company Constellation Energy (CEG). This wasn’t a surprising move since Buffett’s company had already disclosed this sale in a June 1 filing.
Berkshire Hathaway disclosed lowered stakes in Carmax (KMX), ConocoPhillips (COP), Eaton Corporation (ETN), Home Depot (HD), United Health Group (UNH) when comparing June 30 to March 31 filings.
In a July 22 filing Berkshire Disclosed it had also cut its stake in the credit rating company Moody’s (MCO) by 16%.
Over the past several months Berkshire Hathaway has been allocating funds to preferred stocks with at very good prices. The company has invested billions in preferred shares of companies like Goldman Sachs (GS), General Electric (GE), Tiffany’s (TIF), Harley Davidson (HOG) and Dow Chemical (DOW). Some of these deals deliver not only solid yields in the low double digits, but also give warrants which could provide solid capital gains if these stocks recover over the next few years.
What this filing does not show however is the fact that Buffett’s conglomerate “goofed on derivatives”. While there may be more buzz than actual news and the SEC issues have been resolved, it is interesting how Buffett talks one thing but then does exactly the opposite of what he preaches. He’s always held a view against derivatives, yet his company has always engaged in options selling, futures and insurance derivatives.
One of his riskiest trades is the selling of puts on four major world stock indices, which expire somewhere between 2018 and 2028. Berkshire assumed over $37.50 billion in potential liabilities in the process, and has already lost $8 billion on them at the end June 2009. If world stock markets resemble the Japanese stock market of the second “lost decade” for the country with the rising sun, then Berkshire would be on the hook for almost half the $37 billion in assumed liabilities.
Does is pay to follow Buffett’s moves? The answer is yes it does. According to this paper a portfolio that mimicked Buffet’s stock investments would have outperformed S&P 500 by 14.6% annually between 1976 and 2006. Here’s a list of Berkshire Hathaway’s portfolio holdings as of June 30, 2009:
Full Disclosure: Long JNJ
- Myths about Warren Buffett
- Buffett Partnership Letters
- Warren Buffett – The Ultimate Dividend Investor
- Warren Buffet - The richest investor in the World
One way to monitor dividend growth investments is by checking the weekly list of dividend increases. I also find helpful to monitor the an...
As I explained in my article on my dividend retirement plan , I invest in blue chip dividend stocks which can afford increase dividends for...
This is a guest post from Tawcan, who writes about dividend investing and financial independence on his blog at tawcan.com When it comes t...
While I am a buy and hold passive investor, I also try to regularly monitor the companies I own . I usually review the investments I have ma...
Successful investing is simple. You live within your means, save money regularly and invest it. You buy a collection of quality businesses a...
This is a guest post written by Todd Wenning, CFA, who is an equity research analyst. Todd is the author of Keeping Your Dividend Edge: Str...
The daily life of dividend growth investor Successful investors buy stock in companies which are within their circle of competence. This c...
PepsiCo, Inc. (NYSE:PEP) manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. The ...
Johnson & Johnson (NYSE:JNJ), together with its subsidiaries, is engaged in the research and development, manufacture, and sale of vario...
Diageo plc (DEO) produces, distills, brews, bottles, packages, and distributes spirits, beer, wine, and ready to drink beverages. This inter...