Barron's Looks at Buffett's Buys
SA Editor Eli Hoffmann: Barron's takes a detailed look at recent moves of Berkshire Hathaway (BRK.A) master investor Warren Buffett. Key takeaways:
* While publicly tepid on the stock markets, Buffett bought a record $19 billion in equities in 2007, more than double the $9.2 billion he picked up in 2006. Berkshire's equity portfolio is now worth $75B, up from $61.5B in 2006 and $37B in 2004.
* Largest equity holdings: 1) Coca-Cola (KO) [$11.9B]. 2) Wells Fargo & Company (WFC) [$8.5B]. 3) Proctor & Gamble (PG) [$6.8B]. 4) American Express (AXP) [$6.4B].
* Large stakes bought in 2007: Burlington Northern Santa Fe (BNI), Kraft Foods (KFT), Wells Fargo & Company (WFC) [another $3B], and Johnson & Johnson (JNJ).
* Buffett put on a $4.5B bet, by selling put options with expiration dates between 2019 and 2027, that markets will be higher then than now. The trade involves a notional $35B of S&P 500 and three foreign indexes. In the meantime, he gets to invest the cash.
* Berkshire took in $3.2B in premiums to insure certain junk bonds won't default -- apparently low-grade junk that offer a huge risk-reward premium.
