Friday, November 27, 2009

Many Ways to Invest in Berkshire Hathaway

Warren Buffett's famous Berkshire Hathaway (BRK-A), the highest priced stock and one of the most successful companies during the last half-century, recently announced a stock split to take place next year that would divide its Class B shares (BRK-B) at a ratio of 50 to one. The B shares currently represent 1/30th of the value of the Class A shares and have 1/200th of the per-share voting rights. After the split, this would put the B shares at a little less than $68 per share, based on the recent price. Until the split, there are other ways to invest in Berkshire Hathaway.

A second way to invest in the stock is by owning shares in the Sequoia Fund (SEQUX), a mutual fund with a large position in Berkshire Hathaway. Over 20% of their portfolio is invested in the stock. Some of the other stocks in their portfolio include:
Martin Marietta (MLM)
Fastenal (FAST)
Mohawk Industries (MHK)
Expeditors International (EXPD)
O'Reilly Automotive (ORLY)
The minimum investment in Sequoia is $5,000.

A third way to invest is by investing in the Fairholme Fund (FAIRX) which has a little over 4% of their portfolio invested in the Berkshire B shares (BRK-B). Although the concentration is not as significant as Sequoia, it is the number six holding in the portfolio. Fairholme's other major holdings along with the percent of the portfolio that each one makes up include:
Pfizer (PFE) 14%
Sears (SHLD) 8.8%
St. Joe (JOE) 6.7%
Americredit (ACF) 5%
Forest Labs (FRX) 4.6%
Minimum investment is $2500.

Markel Corp. (MKL) is an insurance company that many consider to be a mini-Berkshire, especially since it has over $90 million worth of Berkshire Hathaway, a little over 4% of their net worth.

There are other funds that have around two percent of their portfolio in Berkshire, such as Legg Mason ClearBridge Appreciation A (SHAPX) but the percentage isn't enough to be a close play on Berkshire.

One other option is to create a portfolio that emulates Berkshire's holdings of publicly traded stocks, however, this wouldn't cover Berkshire's holdings of non-public stocks. In addition, it would involve purchasing many different stocks, so you would be better off just buying the Class B shares. But if you just want to pick and choose the "best" of Berkshire's holdings, here is the list of some of their major stockholdings:

American Express Co. (AXP)
The Coca-Cola Company (KO)
ConocoPhillips (COP)
ExxonMobile (XOM)
Johnson & Johnson (JNJ)
Kraft (KFT)
Moody’s Corporation (MCO)
Procter & Gamble Co. (PG)
US Bancorp (USB)
Wal-Mart Stores Inc. (WMT)
The Washington Post Company (WPO)
Wells Fargo (WFC)
Wesco Financial Corporation (WSC)

Don't forget to check out the Christmas List for the Warren Buffett Fan.

Author owns PFE.


Unknown said...

The Boulder Total Return Fund (BTF) had 27.6% of its portfolio in Berkshire A plus another 12.0% in Berkshire B as of August 31.

At Friday's close the fund was selling at a 16.1% discount.

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