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Warren Buffett’s Undervalued Mega Holdings
Posted by: Sally Jones (IP Logged)
Date: October 7, 2013 01:59PM

According to GuruFocus research, Warren Buffett’s Berkshire Hathaway Inc. (BRK.A)(BRK.B) currently holds four stocks, considered undervalued based on Discounted Cash Flow model calculations, applied to predictable companies only.

Here are the company updates and Berkshire Hathaway’s holdings as of June 30, 2013.

Wal-Mart Stores Inc. (WMT)

Predictability: 5 out of 5 Stars

Down 5% over 12 months, Wal-Mart Stores Inc. has a market cap of $233.77 billion; its shares were traded at around $72.01. The P/E ratio is 14.00 and the P/B ratio is 3.30.

Incorporated in1969, Wal-Mart Stores Inc. operates in more than 10,900 retail units in 27 countries. The company’s operations comprise three reportable business segments: Wal-Mart US, Wal-Mart International and Sam's Club.

The company reported second quarter 2013 diluted earnings per share were up by 5.1%, at $1.24. In the same quarter a year ago, EPS was $1.18. Net sales have also increased by $2.7 billion for the quarter.

Historical share pricing, revenue and net income:



Guru Action: As of June 30, 2013, Warren Buffett’s Berkshire Hathaway Inc. holds 49,247,235 shares, valued at around $3.66 billion, and a portfolio weight of 4.1%.

In second quarter Berkshire took a rare loss of 5.3% on the holding, with 49,247,235 shares at an average price of $76.89.

Across a five-year history, Berkshire Hathaway Inc. had a gain of 33% on 29,302,935 shares bought at an average price of $54.66 per share.

U. S. Bancorp (USB)

Predictability: 2 out of 5 Stars

Up 4% over 12 months, U. S. Bancorp has a market cap of $66.77 billion; its shares were traded at around $36.3. The P/E ratio is 12.30 and the P/B ratio is 1.90.

Incorporated in1929, U.S. Bancorp is a multi-state financial services holding company, providing a full range of financial services, including lending and depository services, cash management, foreign exchange and trust and investment management services. The company also engages in credit card services, merchant and ATM processing, mortgage banking, insurance, brokerage and leasing.

The company reported financial results for the second quarter of 2013 with a net income of $1.48 billion, up from $1.41 billion in the same quarter of 2012. This quarter’s net income translates to $0.76 per diluted common share, compared to $0.71 in the same quarter of 2012.

Historical share pricing, revenue and net income:



Guru Action: As of June 30, 2013, Warren Buffett’s Berkshire Hathaway Inc. holds 78,277,301 shares, valued at around $2.82 billion, and a portfolio weight of 3.2%.

In second quarter Berkshire Hathaway Inc. increased its position by 27.37%, buying 16,819,200 shares at an average price of $34.31, making a gain of 6.7%.

Over a five-year history, Berkshire Hathaway Inc. had a gain of 13% on 22,806,800 shares bought at an average price of $32.41 per share. The firm gained 20% selling 13,160,525 shares at an average price of $30.58 per share.

International Business Machines Corp. (IBM)

Predictability: 5 out of 5 Stars

Down 13% over 12 months, IBM has a market cap of $199.64 billion; its shares were traded at around $182.75. The P/E ratio is 13.00 and the P/B ratio is 11.30.

Incorporated in 1911, International Business Machines Corp. creates business value for clients and solves business problems through integrated solutions that leverage information technology and knowledge of business processes. The company draws from an industry portfolio of consulting, delivery and implementation services, enterprise software, systems and financing.

The company reported financial results for the second quarter of 2013 with a drop in net income by 17%, reported as $3.2 billion. This quarter’s net income translates to earnings per diluted share of $2.91, reflecting a drop of 13% from the same quarter of 2012. Revenue for the quarter is down by 3% at $24.9 billion. IBM’s cloud revenue is up by 70% in the first six months of the year.

Historical share pricing, revenue and net income:



Guru Action: As of June 30, 2013, Warren Buffett’s Berkshire Hathaway Inc. holds 68,121,984 shares, valued at around $13.01 billion, and a portfolio weight of 14.6%.

This holding has been losing ground since the fourth quarter of 2011. In second quarter Berkshire Hathaway Inc. had a loss of 9.6% on 68,121,984 shares bought at an average price of $203.70.

Over ten quarters, Berkshire Hathaway Inc. had a gain of 7% on 68,121,984 shares bought at an average price of $172.80 per share.

American Express Co. (AXP)

Predictability: 3.5 out of 5 Stars

Up 25% over 12 months, American Express Co. has a market cap of $79.11 billion; its shares were traded at around $73.33. The P/E ratio is 17.90 and the P/B ratio is 4.10.

First founded in 1850 and incorporated in 1965, American Express Co. is a global service company offering charge and credit payment card products and travel-related services to consumers and businesses around the world. The company’s four reportable operating segments are: US Card Services, International Card Services, Global Commercial Services and Global Network and Merchant Services.

Historical share pricing, revenue and net income:



The company reported financial results for the second quarter of 2013 with a net income of $1.4 billion up from $1.3 billion in the same quarter a year ago. The company reported that earnings per diluted share were up 10%, year-over-year, at $1.27 versus $1.15 in the same quarter of 2012.

Guru Action: As of June 30, 2013, Warren Buffett’s Berkshire Hathaway Inc. holds 151,610,700 shares, valued at around $11.33 billion, and a portfolio weight of 12.7%.

In second quarter Berkshire Hathaway Inc. gained 3.1% on 151,610,700 shares bought at an average price of $71.14.

Check out this long-time trading history:



In a recent update from GuruFocus, the Berkshire Hathaway portfolio lists 42 stocks, two of them new, and a total value of $89.03 billion with a quarter-over-quarter turnover of 3%. Guru Warren Buffett is considered the most respected and successful investor in history.



Here is the complete portfolio of Warren Buffett.

More valuable information on Warren Buffett:

1. Warren Buffett's Undervalued Stocks
2. Warren Buffett's Top Growth Companies
3. Warren Buffett's High Yield stocks
4. Stocks that Warren Buffett keeps buying





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Check out the GuruFocus special feature 52-week low screener to find the stocks hitting new lows but are still held by top investor Gurus and Insiders.


Stocks Discussed: WMT, USB, IBM, AXP, BRK.A, BRK.B,
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