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Holly LaFon
Holly LaFon
Articles (8153) 

Warren Buffett’s Stocks with the Most Insider Buying

June 26, 2012 | About:

It is a widely known investing axiom that insiders sell their companies’ stocks for any number of reasons, but they buy for only one reason – they think the stocks are going to go up. Because Warren Buffett’s stock-picking abilities helped make him one of the world’s wealthiest men, checking into his portfolio for companies with heavy insider buying can be a good place to start research on worthwhile stocks.

The stocks in Buffett’s portfolio with most active insider buying are: The Coca-Cola Company (NYSE:KO), Gannett Co. Inc. (NYSE:GCI), General Electric Company (NYSE:GE) and The Washington Post Company (WPO).

Coca-Cola Company (NYSE:KO)

Warren Buffett owned 200 million shares of Coca-Cola at the end of the first quarter, making it almost 20% of his portfolio. He has never sold a share of the company.

Coke had three insider buys in the second quarter: Three directors bought shares. The largest purchase was of more than $20.3 million worth of shares by Director Barry Diller in April. As Diller’s purchase price averaged about $77 per share, investors can buy the stock cheaper at its Tuesday price of $75.25 per share after a 0.67% increase for the day.

Six insiders also sold shares of the company in the second quarter.

Two days before Diller and another director bought shares, Coke announced that it was seeking approval for a 2-for-1 stock split. Coke’s chairman was pushing for the split, the 11th in its 92-year history and its first in the last 16 years. Shareholders will vote on the split July 10.

"Our recommended two-for-one stock split reflects the Board of Directors' continued confidence in the long-term growth and financial performance of our Company," said Muhtar Kent, chairman and CEO of TheCoca-Cola Company. "Our system's 2020 Vision to double our revenues over this decade provides a clear roadmap for creating value for our consumers, customers, bottling partners and shareowners. A stock split reflects our desire to share value with an ever-growing number of people and organizations around the world."

Coke also announced in the first quarter its 50th consecutive annual dividend increase, giving shareholders an 8.5 percent raise from 47 to 51 cents per share per quarter.

Gannett Co. Inc. (NYSE:GCI)

Buffett owns 1,740,231 shares of Gannett Co. Inc. as of March 31, 2012, making it a mere 0.035% of his portfolio.

It tied with General Electric Co. (NYSE:GE) for the second-most insider buys in his portfolio, with one director making two purchases of 20,000 shares in the second quarter. Gannett trades for $14.04 Tuesday after a 6.3% jump. Multiple newspaper companies’ stocks advanced on Tuesday after News Corp. announced the potential spin-off of its publishing entities.

In its first quarter results released April 16, Gannett announced earnings per share of $0.28 compared to $0.37 per share in the prior-year quarter. Net operating revenues were down 2.6% over the prior year in publishing advertising and publishing circulation, but increased in its digital and broadcasting segments.

Gannett’s focus on establishing digital content and advertising platforms that will generate growth was evidenced in a 13 percent increase of digital revenue growth in its Publishing segment.

Regarding future plans, the company is expecting 2% to 4% annual revenue growth and greater earnings growth by 2015, and plans to return more than $1.3 billion to shareholders by 2015.

"In addition, our new all-access subscription model has been rolled out in 38 markets and is progressing as anticipated,” Gannett’s president and CEO Gracia Martore said at a presentation to media and entertainment analysts in New York on Thursday. “New ventures like Digital Marketing Services and the USA TODAY Sports Media Group that leverage and extend our brands and assets are gaining traction and delivering results. We are confident in our strategy and our ability to achieve sustainable revenue growth while maintaining a strong balance sheet and generating increasing shareholder value."

The company also increased its revenue 150 percent to $0.80 per share annually and purchased approximately 2.4 million shares for $35.5 million during the quarter.

General Electric Company (NYSE:GE)

Buffett owns 7,777,900 shares of General Electric Company (NYSE:GE), which is 0.21% of his portfolio. Two insiders bought shares of the company in the last three months. One was a director who purchased 30,000 shares for about $19.50 per share, and the second was a director who bought 4,000 shares at about $19.75 per share, both neat the end of April. The stock is slightly higher on Tuesday at $19.80 per share after a 1.43% increase for the day.

GE is a conglomerate of industrial products and financial services businesses and owns about 50% of NBC Universal. In the first quarter, GE announced its eighth consecutive quarter of operating earnings growth, and GAAP earnings from continuing operations of $3.3 billion, down 4% from the prior-year quarter. Revenues also declined 8% due largely to sales of NBCU and Garanti in the prior-year quarter.

GE also expects double-digit earnings growth in 2012 in its Industrial businesses and GE Capital and is hoping the global industrial business will capitalize on global growth. The company derives approximately 50% of its revenue from overseas.

GE Capital’s first quarter earnings were $1.8 billion, up 27% excluding the sale of Garanti. The division benefited from the first profit in Real Estate since the third quarter of 2008. GE will also begin receiving dividend payments from GE Capital for the first time since the financial crisis. The dividend will amount to 30% of GE Capital’s total 2012 earnings, it reported in May.

Earlier in June, The Wall Street Journal reported that GE is considering selling chunks of GE Capital as many investors feel the conglomerate is getting too large.

The Washington Post Company (WPO)

Buffett owns 1,727,765 shares of the Washington Post Company (WPO) at the end of the first quarter, which is about 0.86% of his portfolio. He bought the shares in mid-1973 and is also the largest shareholder. In January, the Washington Post announced Buffett would not seek re-election to the board after his term expired in May. He had been on the board for nearly 40 years.

The last insider buy at the Washington Post occurred on Dec. 30, 2011. It was of 76 shares at an average price of $392 per share. The stock has since gotten far cheaper, trading for $363.55 on Tuesday, after going up 0.18% for the day.

In the first quarter results, announced in May 2012, the company reported earnings of $31 million, increased to $15.2 million in the prior-year quarter. Revenue was $972 million, down from $1.04 billion in the prior-year quarter. The company’s revenues increased in its television broadcasting division, were flat in its cable television division, and down in both its education and newspaper publishing divisions.

Though Buffett has been purchasing newspapers of late, he noted in a CNBC interview that he disliked the business model of not charging for their product, which the Washington Post has:

“Newspapers have been giving away their product at the same time they’re selling it, and that is not a great business model. So when they put papers up on the internet and you get it free, you’re competing with yourself… And you’re seeing throughout the industry a reaction to that problem and an answer to it. You shouldn’t be giving away a product that you’re trying to sell,” he said.

Other online papers, such as News Corporation (NASDAQ:NWSA), The New York Times (NYSE:NYT) and The Wall Street Journal, already charge for content.

See Warren Buffett’s stock portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Warren Buffett.

  • CEO Buys, CFO Buys: Stocks that are bought by their CEO/CFOs.
  • Insider Cluster Buys: Stocks that multiple company officers and directors have bought.
  • Double Buys:: Companies that both Gurus and Insiders are buying
  • Triple Buys: Companies that both Gurus and Insiders are buying, and Company is buying back.

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