Warren Buffett European Stocks Update
"It wasn't because the news was good. It was because the prices were good. And if you believe that Europe is going to be around, which it certainly is, and it's going to have huge amounts of purchasing power with its citizens and all of that - then you actually look at trouble as possibly ... offering you an opportunity to buy."
Although Buffett’s foreign holdings are not reported in his U.S. SEC filings, he reports those that are valued above $1 billion in his annual letter. Below is an update of these European companies.
Munich Re (XTER:MUV2)
As of year-end 2012, Buffett owns 20,060,390 shares of Munich Re, or 11.3% of the company. He last increased the holding in 2011, when he increased his shares from 19,259,600. The overall cost of the stake was $2.99 billion, and at the end of 2012 it had a market value of $3.599 billion.
Amid the turmoil in Europe, Munich Re’s share price has climbed almost 24% in the last 12 months. Shares are trading at $137.45 on Friday afternoon.
German’s Munich Re is an insurance company focused on reinsurance, primary insurance, health and asset management, with assets of 214 billion euros worldwide.
The company announced its most current results on May 7, 2013. It reported for the first three months of 2013 that its gross premiums increased 0.5% to 13.28 billion euros. Its gross profit increased to 979 million euros, against 782 million euros the previous year, placing it on track to reach its goal of 3 billion euros of profit in 2013. Additionally, its operating result rose by 15.5% and equity rose 4.4%.
According to a study the company conducted, Munich Re expects the insurance sector will exhibit strong growth until 2020.
The stock still appears undervalued on the basis of the Peter Lynch chart:
Buffett owns 25,848,838 shares of Sanofi as of year-end 2012, a 2.0% stake in the company. He paid $2.073 billion for the holding, which was worth $2.438 million at the end of last year. He has not increased the stake in the past several years.
The share price of the France-based company has traded up 32% over the past 12 months, trading for $79.06 per share on Friday afternoon.
The company has seen growing revenue for the past several consecutive years:
In the first quarter, Sanofi’s net sales fell 5.3% year over year to 8.059 billion euros and net income fell 33.5% to 1.613 billion euros. The change in sales was due primarily to generic competition. Other revenue decreased 77% to 98 million euros due to losing exclusivity of its drug Plavix and Avapro in the first half of 2012. It also reduced its debt level to 7.719 billion euros from 7.44 billion the previous quarter and purchased 401 million euros worth of shares.
Tesco PLC (LSE:TSCO)
Buffett holds 415,510,889 shares of Tesco as of Dec. 31, 2012, a stake he increased from 291,577,428 shares in 2012. He owns a total of 5.2% of the company, having paid $2.350 billion for the position, which was worth $2.268 billion at year-end 2012.
Tesco shares gained 10% over the past 12 months to trade for $341.15 per share on Friday afternoon.
The company has been growing its sales steadily over the past five years:
Financial results at the British grocery store chain for the first quarter were announced June 5, 2013. The company’s group sales grew 2.7% year over year excluding petrol. Gross profit declined to 4.089 billion from £5.397 billion the previous year. The company also built up its cash to £2.51 billion from £2.31 billion.
To see more of Warren Buffett’s holdings, see his portfolio here. Also check out the Undervalued Stocks, Top Growth Companies, and High Yield stocks of Warren Buffett.