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Stocks Warren Buffett and Prem Watsa Both Own Part II
Posted by: Holly LaFon (IP Logged)
Date: September 27, 2013 04:19PM

Earlier in the week, GuruFocus reported the top three common holdings of two gurus with similar investing styles – Warren Buffett and Prem Watsa. Both of the investors have built insurance conglomerate and holding companies empires, and use the float and assets to generate even more returns in the stock market. Buffett is Chairman of Berkshire Hathaway (BRK.A)(BRK.B), and Watsa is the chairman and CEO of Canada-based Fairfax Financial Holdings (TSX:FFH).

In addition to the three reported last week – Wells Fargo (WFC), IBM (IBM) and Wal-Mart (WMT) – head into your weekend pondering Watsa and Buffett’s remaining common holdings: U.S. Bancorp (USB), USG Corp. (USG) and Johnson & Johnson (JNJ).

U.S. Bancorp (USB)

Buffett’s USB holding: 2,909,279 shares

Watsa’s USB holding: 2,829,720 shares

Prem Watsa began investing in U.S. Bancorp in the third quarter of 2008, and has been trimming the position since the fourth quarter of 2009. This timing gives him an average 140% gain on the stock. Buffett’s holding predates 2008, and he recently added almost 17 million more shares to the position in the second quarter.

With a deep dive in 2009, U.S. Bancorp stock price is virtually flat since five years ago. It’s at $36.53 per share on Friday – almost a 10-year high.

U.S. Bancorp is the parent company of U.S. Bank National Association, the fifth largest commercial bank in the U.S., operating in 25 states. It has $353 billion in assets.

In the second quarter, the bank recorded 3.9% growth in net income from the previous year, at a record $1.415 billion, and diluted earnings per common share of $0.76. ROA and ROE were 1.7% and 16.1%, respectively, compared to 1.67% and 16.5%, respectively, the previous year. It also ended the quarter with a Tier 1 capital ratio of 11.1% and Tier 1 common ratio of 8.6%.

USB raised its dividend 18% to $0.92 during the quarter, and repurchased 18 million shares, meeting its commitment to return 60% to 80% of its earnings to shareholders each year.

Ten-year revenue and earnings history:

USB is also trading with a P/E of 12.4, P/B of 2 and P/S of 3.57 – almost a three-year high.

USG Corp. (USG)

Buffett’s holding: 17,072,192 shares

Watsa’s holding: 42,800 shares

Watsa began his USG stake in the third quarter of 2008 and has an approximate average 121% gain on it. He also sold out the majority of the holding in the third quarter of 2012 . Buffett has a more long-term entrenchment in the stock, holding more than 17 million shares, or almost 16% of the company, for over five years.

USG stock has had some ups and downs since a big drop in 2009, and is up 1.81% overall since five years ago. Its price is at $28.22 Friday – almost a five-year high.

USG is the company that invited wallboard and mineral wood ceiling tile, and its building products are now used in commercial and residential construction and single home improvement industries.

In the second quarter USG had a sales increase of 15% year over year to $916 million and net income of $25 million, up from a net loss of $57 million the same period last year. Improvement was seen across all of its major business units.

Ten-year revenue and earnings history by quarter:

The company also trades with a P/B of 218.2 and P/S of 0.9 – close to a 10-year high.

Johnson & Johnson (JNJ)

Buffett’s holding: 327,100

Watsa’s holding: 5,915,800

Buffett has held JNJ shares since before 2008, but has whittled the one-massive stake down to just 327,100 shares as of the fourth quarter of 2012. He hasn’t sold any shares since then. Watsa’s stake likewise predates 2008, and he sold shares in the fourth quarter of 2012, and the second quarter of 2013.

Over five years, JNJ’s stock has gained almost 25%. It’s at $86.73 per share on Friday – almost a 10-year high.

In the second quarter, JNJ brought in sales of $17.9 billion, reflecting an 8.5% year-over-year increase. Its earnings were $3.8 billion, compared to $4.3 billion in the second quarter last year. JNJ also increased its earnings guidance for full-year 2013 to $5.40 to $5.47 per share, excluding the impact of special items.

JNJ is currently trading with a P/E of 19.5, P/B of 3.6 and P/S of 3.66 – almost a five-year high.

JNJ 10-year revenue and earnings history by quarter:

Curious which stocks another pair of major investors are holding currently in common? Find out using GuruFocus’ aggregated screener.

This is one of the features that GuruFocus offers to Premium Members. If you are not a Premium Member, why not Take a 7-Day Free Trial?

Guru Discussed: Warren Buffett: Current Portfolio, Stock Picks
Prem Watsa: Current Portfolio, Stock Picks
Stocks Discussed: BRK.A, BRK.B, TSX:FFH, WFC, IBM, WMT, USB, USG, JNJ,
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