Warren Buffet backs up the truck on financials

Discussion in 'Wall St. News' started by makloda, Nov 15, 2007.

  1. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a6qwBcJ5CRAg

    Buffett Boosts U.S. Bancorp, UnitedHealth Holdings

    Nov. 14 (Bloomberg) -- Berkshire Hathaway Inc., the investment firm run by billionaire Warren Buffett, boosted its holdings of banks and health insurers and disclosed a stake in CarMax Inc., the biggest U.S. used-car dealer.

    Berkshire reduced its investment in two railroads, Union Pacific Corp. and Norfolk Southern Corp. the company said in a regulatory filing today disclosing stock holdings as of Sept. 30. The company reported no holdings in Western Union Co. after saying it held 3.2 million shares on June 30.

    Berkshire became the largest shareholder in U.S. Bancorp, the No. 6 U.S. bank, and remains the top investor in Wells Fargo & Co., the No. 2 U.S. home lender, after adding shares in the third quarter. The Omaha, Nebraska-based company also increased holdings in Johnson & Johnson, the world's largest health-products company, and the two largest U.S. health insurers, UnitedHealth Group Inc. and WellPoint Inc.

    ``These two banks are likely to not have huge subprime exposure, and they've both been hammered down in sympathy with the rest of the financials,'' said Frank Betz, who helps manage $800 million, including Berkshire shares, at Carret Zane Capital Management in Warren, New Jersey. ``It's an ideal time for Warren to be looking around in that area because he loves money, and the banks have plenty of it.''

    Buffett also disclosed a stake in CarMax, which declined 20 percent in New York Stock Exchange trading this year as U.S. consumers cut back on spending amid the worst housing slump in 16 years. CarMax rose as much as 6.2 percent to $22.80 in extended trading.

    Used Cars

    Berkshire is the fourth-biggest shareholder of CarMax with 14 million shares, according to Bloomberg data. It reported no stake in the Richmond, Virginia-based company on June 30.

    Buffett built Berkshire Hathaway during the past four decades into a $213 billion company with businesses ranging from ice cream and bricks to insurance and corporate jet leasing. Berkshire had $78 billion invested in stocks at the end of September, according to a filing with the SEC. The company's stock closed today at $137,500 and has gained 25 percent this year.

    Holdings in Minnetonka, Minnesota-based UnitedHealth rose to 6 million shares on Sept. 30 from 4.8 million on June 30, according to the filing. The stake in Indianapolis-based WellPoint increased to 4.5 million shares from 4.2 million.

    Buffett's interest in large health-care concerns makes sense ``given the operating cash flow characteristics of the companies,'' said Brian Wright, an analyst with Jefferies & Co. in New York, in a telephone interview today.

    Johnson & Johnson's operating cash flow was $14.2 billion last year. UnitedHealth's was $6.53 billion and WellPoint's, $4.04 billion. Berkshire held 61.6 million shares of New Brunswick, New Jersey-based Johnson & Johnson as of Sept. 30, a 16 percent increase from June 30.

    Western Union

    Western Union Co., the biggest U.S. money-transfer business, was spun off from First Data Corp. in September 2006. Third-quarter profit dropped 16 percent. The company advanced 1.4 percent in New York trading this year. Buffett had trimmed Berkshire's stake in Western Union by 68 percent in the second quarter.

    It's difficult to determine exactly what Berkshire owns at any given time because Buffett sometimes asks the SEC for permission to temporarily delay disclosure of some holdings to avoid copycat investing. Today's filing says confidential information has been omitted, but doesn't say for which investments.

    Buffett has concentrated his U.S. railroads stake in Burlington Northern Santa Fe Corp., becoming the largest shareholder this year, as he further trimmed stakes in rivals Union Pacific and Norfolk Southern.

    Railroad Stocks

    Berkshire owned 4.5 million shares of Union Pacific as of Sept. 30, a 40 percent reduction from the second-quarter filing, and 1.9 million shares of Norfolk Southern, a 49 percent drop.

    Buffett announced stakes in Union Pacific, the largest U.S. railroad, and Norfolk Southern, the fourth-largest, in May. He withheld information about the two companies in Berkshire's second- quarter filing and disclosed his June 30 holdings in them only last month.
  2. Financials will continue to underperform with the exception of GS