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Wells among Buffett’s 6 biggest 2012 stock buys

By Matt Andrejczak
MarketWatch

Warren Buffett’s checkbook is wide open for giant acquisitions to bulk up Berkshire Hathaway’s portfolio. But meanwhile, he’s finding plenty of stock investments to keep him busy.

A value buyer, Berkshire’s 82-year-old chairman is known for his stock-picking prowess, and he tends to own shares for the long haul. Accordingly, some investors will piggyback on Buffett’s picks in the hope that these companies will be worth far more over time.

Here are Berkshire’s six biggest stock purchases in 2012 by total number of shares bought, culled from 13-F regulatory filings that list the company’s stock positions.

Wells Fargo: Heading into 2012, Buffett wrote that “Wells Fargo is prospering. Its earnings are strong, its assets solid and its capital at record levels.” The banking giant became Buffett’s go-to stock; he bought shares in every quarter of last year. In total, Berkshire acquired 56.2 million shares, boosting its ownership in Wells to 8.7 percent of the company’s stock outstanding from 7.6 percent. The bank is Berkshire Hathaway’s biggest holding by number of shares owned. Buffett recently told CNBC he considered Wells Fargo shares “cheaper” than Coca-Cola, another large Berkshire holding.

General Motors: Buffett jumped on General Motors, buying 25 million shares last year. The activity was second only to Wells Fargo in terms of shares purchased. GM emerged from bankruptcy in 2010 and has made huge strides, notably in China. In addition, the company plans to refresh more than 70 percent of its car and truck lineup in the next 18 months, including a major overhaul of its profitable full-size pickup trucks. This comes as the age of the U.S. auto fleet is at an all-time high and car loans are cheap. GM shares have gained about 10 percent since March 2012.

DirectTV isn’t a stock that Buffett chose himself. It’s a purchase made by his two new investing deputies, Todd Combs and Ted Weschler, whom Buffett hand-picked to join Berkshire within the past two years. Altogether, Combs and Weschler bought 13.7 million shares of the satellite TV provider last year for their respective portfolios they manage for Berkshire. In his March 1 annual shareholder letter, Buffett said of Combs and Weschler: “We hit the jackpot with these two. In 2012, each outperformed the S&P 500 by double-digit margins. They left me in the dust as well.”

Ted Weschler is believed to be behind Berkshire’s aggressive move into DaVita Healthcare Partners – a stock he owned when he ran his own hedge fund. Berkshire bought 10.9 million shares last year, becoming DaVita’s largest stakeholder with 15.7 percent of the company. DaVita provides kidney dialysis services and is seen as a consistent cash-flow generator.

National Oilwell Varco is one of the nation’s largest makers of equipment to drill for oil and gas. Buffett bought 5.3 million shares last year, though the holding represents a tiny fraction of Berkshire’s $88 billion stock portfolio. National Oilwell’s business declined after the economic downturn and low oil prices sapped demand for new rig equipment. But nowadays the company is seeing order rates improve.

IBM: Buffett said last year he was “late to the IBM party” as he was with Coca-Cola in 1988 and the railroads in 2006. He made up for it by purchasing IBM shares in each quarter of 2012, ultimately shelling out for 4.2 million shares. Buffett has praised IBM’s management for being skillful financial stewards, using debt wisely, making value-added acquisitions almost exclusively for cash and aggressively repurchasing its stock. Berkshire owns 68.1 million IBM shares, or 6 percent of the computer-services giant.


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