Warren Buffett recently said that stocks will outperform gold and bonds, calling them the safest asset by far. He's putting Berkshire Hathaway's money where his mouth is, buying up shares of DirecTV and IBM .
In a Fortune article published last week, Buffett offered investors a preview of his upcoming annual shareholder letter. Buffett said equities will "prove to be the runaway winner," with the Oracle of Omaha talking down investments in gold and bonds. Regarding the latter, Buffett said bonds are a dangerous asset because they are currency-based and due to interest rate risk.
During the fourth quarter, Buffett put some cash to work and bought several stocks. The billionaire investor opened a new position in dialysis services company DaVita , acquiring about 2.7 million shares, as well as Liberty Media .
Buffett also added to several of his existing positions, notably purchasing 22.3 million shares of Wells Fargo , one of his favourite picks. That brings his total share count in Wells Fargo to 383.7 million, with a market value of $10.6-billion (U.S.), making it Berkshire's third-largest disclosed holding. Coca-Cola remains Berkshire's largest position with a market value of nearly $14-billion.
Professional investors who manage more than $100-million, like hedge funds and mutual funds, are required to disclose their equity holdings, options and convertible debt on a Form 13F filed to the Securities and Exchange Commission within 45 days of the end of a quarter. Funds aren't required to report short positions betting on declines. Berkshire ended the fourth quarter with 34 reported holdings with a market value of $66.1-billion.
Buffett doesn't always publish his holdings in so-called 13-F filings. If he's building a stake in a company, he uses a loophole to opt out of disclosure regulations. But once his holdings are released publicly, people tend to follow him, pushing up share prices.
According to Tuesday's filing, Buffet added to several other positions, including IBM, DirecTV, CVS Caremark , Visa , General Dynamics , Intel , and Verisk Analytics .
IBM and Intel were notable picks for Buffett in the third quarter, becoming the first technology buys for Berkshire. Buffett had avoided investing in technology companies because he said they're difficult businesses to predict. Buffett's entry into IBM is based on the company's service offerings, which are more predictable and conducive to his value-investing strategy. IBM is Berkshire's second-largest holding, with a market value of $11.7-billion as of Dec. 31.
DaVita and DirecTV were top picks by Ted Weschler, the hedge fund manager who recently closed up Peninsula Capital Advisors to join Berkshire Hathaway.
Buffett did unload some shares during the fourth quarter, notably dumping his entire stake of 421,000 shares of Exxon Mobil . He also reduced his stakes in Johnson & Johnson and Kraft Foods , selling 8.4 million and 2.7 million shares, respectively. Kraft remains Berkshire's sixth-largest holding by market value while Johnson & Johnson ranks ninth.