CNBC.com has a fun little tool they call the Berkshire Hathaway Portfolio Tracker, and based on the latest SEC filings, it does exactly what the title suggests. Of the list, the top 10 holdings range from about $3 billion in value upwards to $26 billion:
What’s interesting about the list is that aside from PSX, which is up 30% on the year, and KHC which was a merger and is up 5% since the deal closed in July, the largest holdings in Buffett’s portfolio are either flat (or up small) on the year (WFC flat, DVA up 2%, KO flat, USB down 5%) or massively under-performing the S&P500 (which is up 2% on the year) (AXP down 20%, IBM down 13%, PG down 16% and WMT down 31%).
Which brings me back to some comments I made this morning about legendary hedge fund investor Stan Druckenmiller’s current investment strategy, as detailed on Tuesday to CNBC’s Andrew Ross Sorkin:
The most interesting commentary…. is that he is very “open minded” to the notion that a bear market has begun in equities. He was bearish this summer, but then “covered very well”. He unfortunately “did not play the rally”, but merely “got out of the way of it”. He is now “neutral and long high beta, high growth stuff, companies that are investing in their businesses, stuff that will do very well with low nominal growth and short a bunch of value companies that buyback stock and need cyclical growth against it.” And here is the kicker, Druckenmiller said “I can see myself getting very bearish, and I can’t see myself getting really bullish”.
It’s hilarious in a way. Druckenmiller has stated he is short IBM, and stocks like it, and long a bunch of crap. He is effectively shorting Buffet’s holdings and doing what we would call a Risk Reversal in the options biz.
If I were a holder of BRK/B (which I am not) I would be happy with the 200% return from the 2009 financial crisis lows, similar to the S&P 500, but would also recognize the fact that from BRK/B’s 2007 highs, to its 2009 lows, the stock sold off about 55%, a tad more than the SPX. BRK/B is down 9% on the year, and a tad more from its all time highs made last December. Since the highs the stock has made a series of lower highs, and lower lows, and is in a very well defined downtrend with $130 being key support:
Man oh man, if you are a Warren Buffett worshiper, then you recognize that over the years he has added a lot of alpha to his self-described simple investment process by some crafty crisis deals (most recently BAC, GE & GS) and selling options premium. But Buffett has always avoided the type of innovative technology companies that have made up a good bit of the SPX’s performance of late. If you are waiting for a period of out-performance for BRK/B then it is likely to come during the next crisis/market meltdown, not 7 years after the last one. And the day he adds Apple (AAPL) to his portfolio is probably the day you want sell your shares.
The company is scheduled to report Q3 earnings tomorrow after the close.