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UPDATE: Buffett's Berkshire Cuts J&J, Kraft; Buys Deere, Wabco

Date : 11/15/2012 @ 6:02AM
Source : Dow Jones News
Stock : Bank of New York Mellon Corp. (The) (BK)
Quote : 36.35  -0.01 (-0.03%) @ 2:30AM
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UPDATE: Buffett's Berkshire Cuts J&J, Kraft; Buys Deere, Wabco

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--Berkshire makes substantial cuts to stakes in Johnson & Johnson, Kraft and Procter & Gamble

--Berkshire reveals small new investments in Deere, Precision Castparts and Wabco Holdings

--In an atypically active quarter, Berkshire makes several other adjustments to equity portfolio

(Adds details on individual holdings beginning in the seventh paragraph.)

 
   By Erik Holm 
 

Warren Buffett's Berkshire Hathaway Inc. (BRKA, BRKB) continued to liquidate massive holdings in Johnson & Johnson (JNJ), Kraft Foods Inc. and Procter & Gamble Co. (PG) in the third quarter, suggesting the transfer of more investment duties to the next generation of Berkshire stock pickers.

The company also revealed small new investments in Deere & Co. (DE), Precision Castparts Corp. (PCP) and Wabco Holdings Inc. (WBC), and boosted its already large stakes in International Business Machines Corp. (IBM) and Wells Fargo & Co. (WFC)

And Berkshire eliminated positions in some relatively new holdings, including CVS Caremark Corp. (CVS) and Dollar General Corp. (DG).

The moves, disclosed in a regulatory filing late Wednesday, reveal an uncommonly active quarter for Mr. Buffett and Berkshire's new portfolio managers, Todd Combs and Ted Weschler. Together, the three men sold more stock than they bought in the third quarter, with the cuts in J&J and Kraft leading the way.

Mr. Buffett, who serves as Berkshire's chairman, chief executive and head of investing, has trimmed stakes in J&J, Kraft and P&G repeatedly in recent quarters. He said in an interview on CNBC last month that he had passed along some proceeds from his stock sales to Mr. Combs and Mr. Weschler as they take on a larger role in managing Berkshire's assets.

Berkshire's total U.S. stock investments disclosed in the filing were worth $75.3 billion at the end of the third quarter, up slightly from the $74.3 billion that Buffett's Omaha, Neb.-based conglomerate reported a quarter earlier.

Berkshire's holding in J&J fell below a half million shares in the third quarter, a dramatic drop from the 10 million shares it held at the end of the second quarter and the roughly 30 million it held at the end of the first quarter.

The stake in Kraft, meanwhile, dropped by half to about 30 million shares as of Sept. 30. Kraft changed its name to Mondelez International Inc. (MDLZ) and spun off its North American grocery brands on Oct. 1. Those changes would presumably be reflected in Berkshire's next filing, due in February.

Berkshire's stake in P&G fell by a far less dramatic margin. Buffett's company held about 52 million shares at the end of the third quarter, down from 60 million at the end of the second. The stake is worth about $3.5 billion.

The $13.3 billion stake in Wells Fargo rose about 3% to about 423 million shares, while the IBM holding increased by 1% to roughly 68 million shares valued at $12.6 billion.

Berkshire's largest stake, a $14.4 billion position in Coca-Cola Co. (KO), was unchanged.

Mr. Buffett's company, like other investment firms that control an investment portfolio of more than $100 million, is required to report stock holdings 45 days after the end of a given quarter, giving the public its freshest possible glimpse into the investing decisions of the "Oracle of Omaha."

But Mr. Buffett has repeatedly warned not all the moves in the investment portfolio are his. On CNBC last month, he went so far as to say "very little of it's mine."

While he's responsible for some of Berkshire's larger positions in companies including Coke, Wells Fargo and IBM, those stakes usually don't change as often or as dramatically as the smaller, newer positions picked by Mr. Combs and Mr. Weschler.

"The action is with Ted and Todd," he said.

The stakes in agricultural equipment maker Deere, Precision Castparts and Wabco were all worth less than $300 million, well below Mr. Buffett's threshold. Precision Castparts makes parts for airplanes and gas turbines, while Wabco supplies braking, transmission and stability systems to the makers of commercial vehicles.

Precision Castparts rose 1% to $175.10 in late trading. Deere was up 0.6% at $85.25. Wabco rose 0.4% to $57.85.

Most of the other moves in the portfolio were also in the company's smaller positions. They included the elimination of positions in CVS Caremark and Dollar General; the reduction of stakes in General Electric Co. (GE), United Parcel Service Inc. (UPS) and Visa Inc. (V); and the increased investment in Bank of New York Mellon Corp. (BK), DirecTV (DTV), General Motors Co. (GM), and Viacom Inc.'s (VIAB) Class B shares, among others.

An earlier filing with securities regulators revealed that Berkshire had spent about $1.18 billion buying equities in the third quarter, while selling about $3.18 billion of stocks.

--Paul Ziobro contributed to this article.

Write to Erik Holm at erik.holm@dowjones.com

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