"Tracking Warren Buffett’s Berkshire Hathaway Portfolio – Q1 2017 Update"
"Berkshire Hathaway's 13F stock portfolio value increased from $148B to $162B this quarter.Their largest three holdings are at ~46% of the entire portfolio.Berkshire Hathaway increased Apple and Bank of New York Mellon while reducing International Business Machines. They also dropped Twenty First Century Fox.This article is part of a series that provides an ongoing analysis of the changes made to Berkshire Hathaway’s US stock portfolio on a quarterly basis. It is based on Warren Buffett’s regulatory  filed on 05/15/2017. Please visit our  article series for an idea on how his holdings have progressed over the years and  for the moves in Q4 2016.During Q1 2017, Berkshire Hathaway’s (BRK.A) (BRK.B) US long stock portfolio increased from $147.99B to $161.87B. The top five positions account for ~64% of the portfolio: Kraft Heinz Co., Wells Fargo, Apple Inc., Coca Cola, and American Express. There are 43 individual stock positions many of which are minutely small compared to the overall size of the portfolio.() are a treasure trove of information and are a very good source for anyone starting out on individual investing.Stake Disposals:Twenty First Century Fox (FOX) (FOXA): FOXA was a minutely small 0.17% of the US long portfolio stake established in Q4 2014 at prices between $32 and $39 and increased by ~30% the following quarter at prices between $33 and $38. Q3 2015 saw another ~44% increase at prices between $25 and $34.50. The disposal this quarter was at prices between $28.50 and $32.50. The stock currently trades at $27.73.Stake Increases:Apple Inc. (AAPL): AAPL is a top-three 11.48% of the 13F portfolio stake established in Q1 2016 at prices between $93 and $110 and increased by ~55% the following quarter at prices between $90 and $112. Last quarter saw another ~275% increase at prices between $106 and $118 and that was followed with a stake doubling in January at prices between $116 and $122. The stock currently trades at $156. The activity indicates a clear bullish bias.Southwest Airlines (LUV): LUV is a 1.58% portfolio stake purchased last quarter at prices between $38.50 and $51 and increased by ~10% this quarter at prices between $49.50 and $59. The stock is now above those ranges at $58.03.Note: Berkshire owns ~7.9% of LUV.American Airlines (AAL): AAL stake was first purchased in Q3 2016. The position is now at 1.29% of the portfolio. The original purchase was at prices between $28 and $39 and doubled last quarter at prices between $36.50 and $50. There was a ~8% increase this quarter at prices between $40 and $50. It is now at $46.68.Note: Berkshire controls ~10% of AAL.Bank of New York Mellon Corp (BK):  BK is a ~1% of the US stock portfolio stake. The bulk of the original position was purchased in Q2 2012 at prices between $19.50 and $25. The stake was increased by 30% in Q2 2013 at prices between $26.50 and $30.50. The five quarters thru Q3 2015 had seen an about turn as there was a combined ~20% reduction at prices between $36 and $45. The stock currently trades at $47.11. Last two quarters had seen marginal increases. This quarter saw a ~50% increase at prices between $43.50 and $49.Liberty SiriusXM Group (LSXMA) (LSXMK): The tracking stock was acquired as a result of Liberty Media’s recapitalization in April 2016. Shareholders received 1 share of Liberty SiriusXM Group, 0.25 shares of Liberty Media Group and 0.1 shares of Liberty Braves Group for each share held. Berkshire held 30M shares of Liberty Media for which he received the same amount of Liberty SiriusXM Group shares. Last quarter saw a ~8% increase at prices between $31 and $36 and that was followed with a marginal increase this quarter. The stock is now at $36.40.Note: Regulatory filings since the quarter ended show Berkshire owning ~38M shares (~10.5% of the business): ~20% stake increase at ~$40 per share after the quarter ended. The activity indicates a bullish bias. The stock is trading at a ~17% NAV-discount to the parent’s valuation. For investors attempting to follow Buffett, LSXMK is a good option to consider for further research.Sirius XM Holdings (SIRI): The 0.55% SIRI stake was purchased last quarter at prices between $4.08 and $4.61 and it currently goes for $4.78. This quarter saw a marginal increase.Note: Berkshire owns ~3.7% of SIRI.Stake Decreases:International Business Machines (IBM): The original IBM position was purchased in Q3 2011 at prices between $158 and $185. As of last quarter, the share count had gone up by almost 40% through periodic purchases. There was an about-turn this quarter: ~21% selling at prices between $166 and $182. The stock currently trades at ~$152 and Berkshire’s cost-basis is at around $170.Note: Buffett disclosed earlier this month that they had reduced IBM position by around one-third: over 10M shares sold after the quarter ended.Delta Air Lines (DAL): DAL was a very small 0.19% position in Q3 2016. The stake saw a whopping ~850% increase last quarter to a ~2% portfolio stake at prices between $39 and $52. The stock currently trades at $49.51. There was a ~8% trimming this quarter.Note: Berkshire controls ~7.5% of DAL.Wabco Holdings (WBC): The minutely small 0.21% portfolio stake in WBC saw a ~13% selling this quarter. Berkshire controls ~5.4% of the business.Kept Steady:Kraft Heinz Co. (KHC): KHC is currently the largest 13F stock position at 18.27% of the portfolio. Kraft Heinz started trading in July 2015 with Berkshire owning just over 325M shares (~27% of the business). The stake came about as a result of two transactions with 3G capital as partner: a ~$4B net investment in 2013 for half of Heinz and a ~$5B investment for the acquisition of Kraft Foods Group earlier this year. Berkshire’s cost-basis on KHC is below $30 per share compared to the current price of $89.45.Wells Fargo & Co. (WFC):  WFC is Buffett’s second-largest stake at 16.49% of the US long portfolio. Q1 2015 saw a ~7M share stake increase at prices between $51 and $56. The previous significant activity was in Q2 2013: over 18M shares were purchased at the time at prices between $34.50 and $38. The stock currently trades at $53.32. Berkshire’s cost-basis is at $25.46.Note: Regulatory filings last month show Berkshire selling ~7M shares at ~$53 per share. Berkshire previously disclosed that they would sell ~9M shares so as to get their ownership stake below 10% of the business.American Express (AXP) and Coca Cola (KO):  These two very large stakes were kept steady during the last ~4 years. Buffett has said these positions will be held “permanently”. Berkshire’s cost-basis on AXP and KO are at around $8.49 and $3.25 respectively and the ownership stakes are at ~17% and ~9.4% respectively.Phillips 66 (PSX): PSX is a fairly large 3.95% of the portfolio stake. It is a long-term position. As of Q4 2014, the stake was very small at ~0.5% of the portfolio (~6.5M shares). Q1 2015 saw a ~14% increase at prices between $59 and $80. The following quarter saw an additional ~300% increase at prices between $76.50 and $82 and that was followed with a stake doubling in Q3 2015 at prices between $70.50 and $84.50. Q2 2016 saw another ~23% increase in the high-70s price range while last quarter saw a ~4% further increase at ~$80. The stock currently trades at $80.12 which is very close to Berkshire’s overall cost-basis of $78.31. For investors attempting to follow Berkshire Hathaway, PSX is a good option to consider for further research.Note: Berkshire avoided disclosing PSX stake in the original Q2 2015 13F by making use of the “”. An amendment filed on 9/4/2015 disclosed the huge stake build up. Berkshire controls ~16% of PSX.US Bancorp (USB): USB, a 2.71% stake has been in the portfolio since 2006. The position was tripled during the 2007-2009 timeframe. In Q2 2013, ~17M shares were purchased at prices between $32 and $36. The last significant activity was a ~5% increase in Q1 2015 at prices between $41 and $45. Berkshire’s cost-basis on USB is $31.80 and the stock is now at $51.77. Buffett controls ~5% of the business.Charter Communications (CHTR): CHTR is a 1.91% of the US long portfolio position. It was established in Q2 2014 at prices between $118 and $158 and more than doubled the following quarter at prices between $151 and $164. Q4 2014 saw a further ~25% increase at prices between $140 and $170. In Q2 2015, the position was again increased by ~42% at prices between $168 and $193 and that was followed with another ~21% increase the following quarter at prices between $167 and $195. Q2 2016 saw a ~10% trimming at prices between $198 and $233. The stock currently trades at $321 compared to Berkshire’s cost-basis of around $160.Note: Berkshire controls ~3.5% of CHTR.Moody’s Inc. (MCO):  MCO is a 1.71% of the US long portfolio stake. It is a very long-term position and Buffett’s cost basis is $10.05.  The stock currently trades at ~$116. Berkshire controls 11.5% of the business.DaVita Inc. (DVA):  DVA is a 1.62% of the US long portfolio position that was aggressively built-up over several quarters: the original stake was doubled in Q1 2012, increased by over 50% in Q2 2012, 24% in Q4 2012, and an additional 16% in Q1 2013. There has been marginal buying since. The bulk of the stake build-up happened at prices between $30 and $49. The stock currently trades at $66.03 compared to Berkshire’s overall cost-basis of $45.33.Note: In May 2013, Berkshire’s Ted Weschler signed an accord with DVA, limiting open-market purchases to 25% of the company- the position is currently at 17.9% of the business.Goldman Sachs (GS): GS is a 1.56% of the US long portfolio stake established in Q4 2013. Berkshire Hathaway received $5B worth of warrants to buy GS stock during the financial crisis (October 2008) at a strike price of $115 (43.5M shares) that was to expire October 1, 2013. Buffett exercised the right before expiry to start this long position. Q3 2015 saw a ~13% reduction at prices between $172 and $213. It currently trades at ~$225.United Continental Holdings (UAL): The minutely small 0.18% UAL position as of Q3 2016 saw a huge ~540% increase last quarter at prices between $52.50 and $76. It currently goes for $77.79. The stake is at 1.26% of the portfolio.Note: Berkshire controls 9.1% of UAL.General Motors (GM):  GM is a ~1% of the US long portfolio position that was first purchased in Q1 2012 at prices between $21 and $30. The stake was increased by 60% in Q2 2013 at prices between $27.50 and $35.  Q1 2014 saw a 25% reduction at prices between $34 and $41 and the following quarter saw an about-turn: ~10% increase at prices between $32 and $37. Q3 2014 saw another ~20% increase at prices between $32 and $38. There was another ~20% increase in Q3 2015 at prices between $27 and $33.50. The stock currently trades at $33.82.USG Corporation (USG):  USG is a very long-term holding and there was a significant 21.39M share stake increase in Q4 2013 due to conversion of notes at $11.40 per share - Berkshire acquired the convertible notes during the financial crisis (2/2009) and USG opted to redeem them on 12/16/2013. Q2 2014 saw a ~12% stake increase at prices between $30 and $33. The stock currently trades at $30.93. Buffett controls around 27% of the business and his cost-basis is ~$19.Verisign Inc. (VRSN): VRSN was first purchased in Q4 2012 at prices between $34 and $49.50. The position was more than doubled in Q1 2013 at prices between $38 and $48 and another one-third the following quarter at prices between $44 and $49. Q1 & Q2 2014 also saw a combined ~17% increase at prices between $47 and $63. The stock currently trades at $90.11 and the position is at 0.70% of the portfolio (~10% of the business).Liberty Global PLC (LBTYA) (LBTYK): The position was established in Q4 2013 at prices between $37.50 and $44.50 (adjusted for the 03/2014 stock-split) and increased significantly in the following two quarters at prices between $38.50 and $46. The three quarters thru Q1 2016 had also seen a combined ~30% increase at prices between $30 and $50. Q2 2016 saw a ~17% further increase at prices between $27 and $39. The stock is now at $29.49 and the stake is at 0.61% of the US long portfolio.Note: Berkshire controls 7.9% of Liberty Global.Monsanto Company (MON): The 0.57% MON position was established last quarter at prices between $98 and $106 and the stock currently trades at $117. In September 2016, Bayer AG (BAYRY) agreed to acquire Monsanto in a $128 per share cash deal.Axalta Coating Systems (AXTA): AXTA is a small 0.46% of the portfolio stake established in Q2 2015 at prices between $28 and $36 and increased by ~16% the following quarter at prices between $24.50 and $33.50. The stock currently trades at $31.29. Berkshire owns ~9.8% of the business. For investors attempting to follow Berkshire, AXTA is a good option to consider for further research.Restaurant Brands International (QSR): QSR is a 0.29% of the 13F portfolio position established in Q4 2014 at prices between $35 and $42. The stock currently trades well above that range at $59.60. It started trading in December 2014 following a merger/rename transaction between Tim Hortons and Burger King Worldwide.Note: Berkshire’s stake in the business is ~4.2%.Costco Wholesale (COST), General Electric (GE),  Graham Holdings (GHC), Johnson & Johnson (JNJ), Liberty LiLAC Group (LILA) (LILAK), Mondelez International (MDLZ), M&T Bank (MTB), MasterCard Inc. (MA), Procter & Gamble (PG), Sanofi (SNY), Torchmark Corporation (TMK), United Parcel Service (UPS), Verisk Analytics (VRSK), Verizon Communications (VZ), Visa Inc. (V), and Wal-Mart Stores (WMT): These are very small positions (less than ~0.5% of the portfolio each) kept steady this quarter.Note 1: Per the , Berkshire has a $1.7B position in Sanofi - so in addition to the ADRs listed in the spreadsheet, Berkshire also owns Sanofi securities listed in Euronext Paris.Note 2: Since November 2015, Warren Buffett is known to own ~8% of Seritage Growth Properties (SRG) at a cost-basis of $36.50 in his personal portfolio. It currently trades at $39.42. SRG is an REIT spinoff from Sears (SHLD) that started trading in July 2015.Note 3: Berkshire has a huge 700M share position in Bank of America (BAC) through the ownership of warrants (strike price $7.14, mid-2021 expiry). The cost to exercise is $5B and the current value is ~$16.8B. Buffett has said that early cashless conversion could happen if the annual dividends reach 44c (currently at 32c).The spreadsheet below highlights changes to Berkshire Hathaway’s US stock holdings in Q1 2017:3/24/2017 - OFB Post - Berkshire Hathaway 2016 Annual Letter & Report - NotesThe Book Value (BV) of Berkshire Hathaway per  is $172,108 per BRK.A share or $114.74 per BRK.B share compared to $155,501 per BRK.A share or $103.67 per BRK.B share in the last AR. The stock currently trades at $254,702 or 148% of BV - the premium over book value has gone up significantly over the last year as that percentage was at 127% ($198,190 share price) this time last year. Buffett’s repurchase criterion is 120% of BV or $206,530. The premium to book value widened as the stock rose 19.4% over the last year compared to book value growth of 10.7%. Net earnings are at $14,645 per BRK.A share for a ttm-PE of 17.39. This is compared to a ttm-PE of 13.25 last year and 18.29 the year before.Historical Book Value (BV) and Market Value Growth:Book Value CAGR 1965-2016 is at 19% and for 2016 it is 10.7%.Market Value CAGR 1965-2016 is at 20.8% vs 9.7% for S&P 500. For 2016, it is 23.4% vs 12% for S&P 500.Earnings per Share (EPS):$14645 in 2016 vs $14,656 in 2015 vs $12,092 in 2014 vs $11,850 in 2013 and $8,977 in 2012 per BRK.A share.  Marginal decrease compared to 21% YOY increase last year and 2% YOY the year before. Roughly a third of Berkshire earnings are realized gains (after tax) historically. For 2016, that figure was $6.5B.Intrinsic Business Value:Plans to continue building Berkshire’s per-share intrinsic value by:Focusing on increasing earning power at subsidiaries both organically and through bolt-on acquisitions,Growth of equity investments,Repurchasing when there is meaningful discount to intrinsic value,Making acquisitions while rarely issuing new shares.Co-Managers:2016: Together, they now manage $21B. Apple & American Airlines were first established by one of them.2015: Precision Castparts acquisition partly credited to Todd Combs. In their investment management roles, Todd Combs and Ted Weschler are each managing $9B each.2014: their roles were expanded to also include running businesses - they took over as Chairman of one business each - combined, those businesses are very small earning around $100M annually - Buffett’s way of developing a deep-bench!2013: Todd Combs and Ted Weschler invested $7B each and they outperformed Buffett in 2013.Long-term economic goal:Maximize average rate of gain in intrinsic business value on a per share basis. Preference is to own a diversified group of businesses with consistent above-average ROC and second choice is to own parts of such businesses (security ownership of Berkshire’s insurance subsidiaries).Look-through earnings relevance:“Undistributed earnings of our investees, in aggregate, have been fully as beneficial to Berkshire as if they had been distributed to us”. So,It is preferable to purchase $2 of earnings that are not reportable rather than $1 of reportable earnings for the same acquisition cost, andLook-through earnings realistically portray yearly gain from operations.Use of leverage:“We use debt sparingly and, when we do borrow, we attempt to structure our loans on a long-term fixed-rate basis”Selling businesses:No interest in selling good businesses Berkshire owns. Sub-par businesses are also not sold as long as they are able to generate at-least some cash and managers/labor relations are good. Capex decisions for the latter are made in a much more cautious fashion compared to the former - it is unlikely that sub-par businesses will see increased profitability with increased spending.BV growth vs S&P 500 Performance Comparison:While this comparison is shown in the first page of the Annual Letter, it has become less meaningful over time. The reasoning has to do with how Berkshire’s business structure has evolved: equity holdings tend to move with S&P 500 and that is now a much smaller portion of overall value. Also S&P 500 gains are reported at 100% while Berkshire’s realized gains get reported at 65% because of taxes.Also, there is another major shortcoming with this comparison: The carrying value of the businesses that are controlled by Berkshire is much more than their carrying value and so the BV far understates Berkshire’s Intrinsic Value (IV). But, IV by definition (discounted value of cash that can be taken out during the remaining lifetime) is an estimate and so is not quoted in any of the releases.Below is a YoY comparison of Berkshire Hathaway’s largest equity investments:Delta Airlines, Southwest Airlines, and United Continental Holdings are large new stakes in 2016. Berkshire also has a stake in American Airlines but that did not make the list as it is not a top stake. USG made the list this time as it has become a large stake because of price increase. AT&T & Deere & Co. are no longer in the list as they were dropped. Procter & Gamble and Wal-Mart Stores are also not in the list as they have become very small stakes.Below is a comparison of Berkshire Hathaway's asset distribution in the "Insurance and Other" area for the last three years:The equity exposure is at ~53%. It is ~10% below the highs reached in 2013. On the other hand, cash has gone up by two-thirds over that same period. It is probable that Berkshire would look to allocate some of that cash this year.() are a treasure trove of information and are a very good option for anyone starting out on individual investing. Books that Warren Buffett recommended in this year’s letter follow:,.To learn more about how to profit from a strategy of cloning super-investors, check out our book .Notes:Average cost-basis info from 2016 AR: AXP - $8.49, AAPL - $110.17, CHTR - $178.23, KO - $3.25, DAL - $41.85, GS - $57.42, IBM - $170.07, MCO - $10.05, PSX - $78.31, Sanofi - $76.32, LUV - $40.67, USB - $31.80, UAL - $55.48, USG - $19.27, WFC - $25.46. KHC - $30.11 GAAP figure listed in the balance sheet is $47.01- not in the list as it is treated as an investment on the “equity” method - part of control group). Below are the AR 2015 listed investments that are not in the 2016 AR:  DVA - $45.53, DE - $81.20, DTV - $59.06, Munich Re - $149.05, PG - $6.40, WMT - $56.09.Regulatory Filings thru 2/15/2017: 13G/As 2/14/2017 - Liberty Media - 0, AAL - 45.54M shares - 8.8%, DE - 0, PSX - 80.69M shares - 15.5%, CHTR - 9.4M shares - 3.5%. 13Gs 2/14/2017 - UAL - 28.95M shares - 9.1%, Liberty Global - 20.18M shares - 7.9%. LUV - 43.2M share s- 7%.11/15/2016 - Add info on the BAC warrants from Q4 2016 Update."