Wednesday, November 16, 2011

Warren Buffett's 6 New Investments -

NEW YORK (TheStreet) -- Warren Buffett revealed earlier today that he spent more than $10 billion for a stake in software-services company IBM(IBM), his first investment in a technology company. And now a regulatory filing shows he made another bet on tech: chipmaker Intel(INTC).
IBM is Berkshire Hathaway's(BRK.A) second-largest holding, pushing Wells Fargo(WFC) to the No. 3 spot. Coca-Cola(KO) is his conglomerate's biggest investment.
The billionaire investor's portfolio held only 33 stocks as of Sept. 30. Buffett started buying IBM shares in March and accumulated 24.9 million shares in the second quarter before adding 32.5 million shares in the third quarter and an undisclosed amount in the current quarter.
Buffett had avoided investing in technology companies because he said they're difficult businesses to predict. Trends come and go, and he prefers longstanding companies such Fruit of the Loom underwear and See's Candies. But IBM, founded in 1911, is as ingrained in the world of technology as railroads are in commodities transportation and machinery companies are in manufacturing.
Buffett's entry into IBM is based on the company's service offerings, which are more predictable and conducive to his value-investing strategy. But Intel is a different animal. It's more likely a play on dominant brands backed by strong customer loyalty. Those brands stand to gain market share in a world that's becoming more driven by technology every day.
Buffett doesn't always publish his holdings in so-called 13-F filings. If he's building a stake in a company, he uses a loophole to opt out of disclosure regulations. But once his holdings are released publicly, people tend to follow him, pushing up share prices.
Based on the third quarter 13-F filing, released today, Buffett added to positions in Wells Fargo and Dollar General(DG). He cut his investments in Kraft Foods(KFT), Johnson & Johnson(JNJ) and ConocoPhillips(COP).
Overall, Buffett added six new investments last quarter. The following pages detail those, including IBM.
Company Profile: IBM offers technology and business services in addition to developing operating system software.
Buffett's Investment: The hedge fund bought 32.5 million shares of IBM during the third quarter, bringing his total investment to 57.4 million shares valued at $10 billion as of Sept. 30. Subsequent to the third quarter, Buffett bought more shares for a total of 64 million worth $10.7 billion.
Share Price Performance: Since the end of March, when Buffett began buying, the stock is up 15%. The stock reached a new 52-week high Oct. 14. At an average purchase price of $170, Buffett probably took advantage of a dip in mid-August when Moody's downgraded U.S. debt.