Buffett's Berkshire Cuts Stake in Kraft, P&G
08/14/2012| 06:06pm US/Eastern
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Warren Buffett's Berkshire Hathaway Inc. (BRKA, BRKB) sold off parts of its massive holdings of consumer giants Kraft Inc. (>> Kraft Foods Inc) and Procter & Gamble Co. (>> The Procter & Gamble Company) in the second quarter.
But Berkshire also initiated a new position in oil-field-equipment maker National Oilwell Varco Inc. (>> National-Oilwell Varco, Inc.) and boosted already sizable positions in International Business Machines Corp. (>> International Business Machines Corp.) and longtime holding Wells Fargo & Co. (>> Wells Fargo & Company), among others.
The moves, disclosed in a regulatory filing Tuesday, 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 stocks than they bought, with the cuts in Kraft and Procter & Gamble leading the way.
Berkshire's stake in P&G fell nearly 20% to about 60 million shares valued at about $4 billion at Tuesday's closing price. Berkshire's retreat from the company comes at a key time for P&G, which continues to lose market share and is feeling increasing pressure from activist hedge-fund investor Bill Ackman.
The stake in Kraft, meanwhile, dropped 25% to about 59 million shares valued at about $2.4 billion. Mr. Buffett is trimming his company's Kraft stake as the food giant is close to completing its split up into a global snacks company and a North American grocery business. Tuesday, Kraft's board approved a spinning off of its grocery business that is scheduled to occur Oct. 1.
Berkshire also reduced stakes in J&J, U.S. Bancorp (>> U.S. Bancorp) and General Electric Co. (>> General Electric Company), among others. Despite challenges including a series of product recalls and legal settlements, J&J shares are near multiyear highs, partly because the company's pharmaceutical unit has scored successes with bringing new drugs to market and recovering from patent expirations for older drugs.
The stake in National Oilwell Varco Inc. (>> National-Oilwell Varco, Inc.), of about 2.8 million shares, was worth about $217 million at the close of trading Tuesday. The position in small enough that it is likely a stock picked by Mr. Combs or Mr. Weschler.
The company also showed a new position in Phillips 66 (>> Phillips 66), a company spun off by another Berkshire holding, ConocoPhillips (>> ConocoPhillips), in April.
Berkshire's total U.S. stock investments were worth $74.3 billion at the end of the second quarter, down slightly from the $75.3 billion Berkshire reported a quarter earlier. 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 Buffett has repeatedly warned that not all the moves in the investment portfolio are his. A portion of the portfolio was long managed by Lou Simpson, the investment manager at Berkshire-owned car insurer Geico Corp. He stepped down more than a year ago, and Mr. Combs and Mr. Weschler have stepped in.
"When our quarterly filings report relatively small holdings, these are not likely to be buys I made but rather holdings denoting purchases by Todd or Ted," Buffett wrote in his widely read shareholder letter in February.
An earlier filing with securities regulators disclosed that Berkshire had spent about $1.86 billion on equities in the second quarter, while selling about $3 billion of stocks.
-- Peter Loftus and Paul Ziobro contributed to this article.
Write to Erik Holm at erik.holm@dowjones.com
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