BUFFETT’S ‘DIRTY DOZEN’ CAUSE $13B HEADACHE
Billionaire investor Warren Buffett released his must-read, wisdom-filled letter to Berkshire Hathaway shareholders Saturday, and stood by his self-described “Big Four” stock investments, despite their inclusion in a lineup of so-called “dirty dozen” stocks Berkshire owns that have suffered a tough go in the past year.
There are 12 stocks in Berkshire’s largest 15 holdings, including American Express, Wells Fargo and International Business Machines, that are down a combined $13 billion over the past 12 months, according to a USA TODAY analysis of current holdings data from S&P Global Market Intelligence.
Buffett, Berkshire’s CEO known for his stock-picking prowess, suffered some big declines in many of his biggest holdings. The losses only make things more uncomfortable for investors, as Berkshire shares are down about 11% over the past 12 months. Berkshire’s A shares closed at $198,191 Friday, vs. a per-share price of $222,250 back on Feb. 26, 2015.
Buffett offered words of praise for his “Big Four” — American Express, Coca-Cola, IBM and Wells Fargo — saying Berkshire “increased its ownership last year” in all four names.
Berkshire upped its stake via share purchases in IBM to 8.4% from 7.8% at the end of 2014 and Wells Fargo to 9.8% from 9.4%. Stock repurchases at Coca-Cola and American Express boosted ownership in those companies to 9.3% and 15.6%, respectively, according to the shareholder letter. Each additional 1% ownership in the four companies raises Berkshire’s portion of their aggregate annual earnings by about $500 billion, Buffett wrote.
“These four investees,” Buffett said, “possess excellent businesses and are run by managers who are both talented and shareholder-oriented.”