In the much discussed shareholder letter of Berkshire Hathaway, Warren Buffett released the list of stocks that Berkshire owned on 12/31/2010. If one compares with the list of stocks in Buffett portfolio covered by us, you will find that some of the stocks are not in our list. These are the international stocks that Berkshire is not required to report in 13Fs.
The table below is the summary of these stocks. We also list the numbers of shares on 12/31/2009 so that you can easily see the changes in the number of shares.
|Symbol||Company||# of Shares on 12/31/2010||# of Shares on 12/31/2009||Costs ($mil)||Market Value ($Mil)||% of the Company||Profit (%)|
|BYDDY.PK*||BYD Company, Ltd.||225,000,000||225,000,000||232||1182||9.9||409%|
Here are some details of these individual companies.
BYD Company, Ltd.
BYD Company, the much storied Chinese car company, is run by Chuan-Fu Wang. To Charlie Munger, Chuan-Fu Wang is the combination of Thomas Edison and Jack Welch. It was said that Charlie Munger was the one who pushed for Berkshire’s investment in BYD. Buffett's purchase was also well timed to take advantage of the 2008 fallout in China shares. Berkshire owns close to 10% of the company with a profit of more than 400%.
BYD has seen its stock prices cut by more than 50% in the last 11 months as the company’s December sales fall 15% amid rising foreign competition.
Munich Re is a more recent purchase of Berkshire Hathaway. Berkshire invested more than $2.8 billion to get 10.5% of the total company shares. The purchase was reported in January 2010. But Buffett has been a shareholder in Munich Re since at least 2008. Munich Re Chief Executive Officer Nikolaus von Bomhard told shareholders at the annual meeting in Munich that year that he expected Buffett to remain a shareholder in the company. At the time, Buffett’s stake was below the 3 percent threshold, the lowest that requires disclosure.
We all know Buffett loves insurance. He loves the float with insurance business. Berkshire owns General Re and is the world's third-largest reinsurer. Its Munich Re stake was revealed 11 months after Berkshire injected 3 billion Swiss francs ($2.88 billion) into Swiss Re, after the world's second-largest reinsurer wrote down large sums of illiquid assets.
Munich Re’s stock price is at about where Berkshire has paid. So if you want to buy this stock, you are at least paying the same prices as what Buffett paid.
Warren Buffett bought into POSCO, the largest steel marker in Korea, in 2006. Berkshire paid $768 million for 4.6% of the company. Regarding to POSCO, Buffett said "It's a great company. And great companies get worth more and more all the time." Indeed, Buffett is sitting on 122% of profit with this investment.
In October of 2007, right at the recent peak of the stock market, Buffett visited Korea and said that Korean market was modestly cheaper than most markets around the world. He said, “…but I am just looking at price earnings ratios, and you have a flourishing economy here with 50 plus million people that seem to be working very hard. So, ah, I would think that the Korean market would do as well over the next 10 years ... not 10 weeks, 10 months ... but 10 years, as most markets, and perhaps a little better.”
More than three years has passed since he spoke, Korean stock market experienced an even worse crash than its US counterpart, losing 70% at its bottom. It has since recovered more dramatically and had similar performance to the US market for the three and half years.
POSCO recently acquired Daewoo International Corporation. The chief executive of POSCO said in January that it would be difficult to raise steel prices enough to cover rising raw materials costs stemming from flooding in Australia, which has affected coal mines, rail links and ports.
The good news, Warren Buffett is buying more France pharmaceutical giant Sanofi-Aventis, and Berkshire’s cost is about 25% higher than the current market price. So if you want to buy the stocks of Sanofi-Aventis, you will be paying less than Warren Buffett has paid. Berkshire spent more than $2 billion for about 2% of the company. Now you can buy 2.5% of the company with $2 billion.
As pointed out by our columnist Alan Schram, “there are six large positions Berkshire owns that are trading at or below what Buffett paid for them (I have been following Berkshire since I attended my first annual meeting in 1993, and that is unusual). Those are ConocoPhillips, Johnson & Johnson, Kraft, Munich RE, US Bank and Sanoffi Aventis (Sanoffi is the largest unrealized loss in percentage terms). So you get a chance to buy shares at or below Berkshire’s cost basis---that has the tendency of working out very well.”
A note here, the numbers of shares reported here is different from what we have in Buffett’s portfolio. Buffett may have bought the shares directly in European stock market, and Berkshire is not required to report it in 13Fs.
Tesco Plc (TSCDY.PK)
US consumers and investors may not know Tesco, but UK company one of the most powerful retailer on the planet. With an annual sales of $90 billion, it is just behind Walmart (NYSE:WMT) and Homedepot (NYSE:HD). Berkshire paid $1.4 billion for 3% of the company. The stock price has appreciated for a modest 14% since Berkshire bought.
Berkshire first invested in Tesco in 2006, right about the time the retailer announced it was coming to America with Fresh & Easy, acquiring shares then equaling about a 1% ownership stake in the company. Since then Buffett has regularly increased his purchases of Tesco stock, resulting in the 3.2% ownership. Tesco is probably an equivalent of Walmart for Warren Buffett’s international plays. Buffett bought Walmart at the same time as he buys Tesco in 2006, and he added more in the third quarter of 2010, as he was buying more Tesco shares.
For the US holdings of Berkshire Hathaway,please go to http://www.gurufocus.com/holdings.php?GuruName=Warren+Buffett&tab=top