OMAHA, Neb. (
) -- Capitalists the country over would probably kill for a lunch date with
, and some have already paid millions for just a few minutes seated across the table from the
chief to discuss the well-kept secrets of his decades-long outsmarting of the markets.
While IBM chess programs now easily beat the best human calculators like Gary Kasparov, no computer or index has yet proven more sagacious at generating returns than Buffett.
Some investors have obsessed over the penning of letters to Buffett as a means of gaining an audience with the grand master of the markets, the investing world's epistolary equivalent of Kafka's
Letter to his Father
, or maybe an investment world take on Andrew Marvell's
To His Coy Mistress
And it's worked, as evidenced by the recent news that 29-year old New York City-based hedge fund manager Cara Goldenberg received an invitation to Berkshire Hathaway headquarters to meet with Buffett over Thanksgiving.
The young hedge fund manager's well-crafted note about sharing research ideas floated above the veritable sea of letters that are sent to Buffett -- the Berkshire Hathaway chief could probably load at least a few Burlington Northern freight cars with all his fan mail, or use the services of one of his new, favorite stocks, information storage firm
, to organize all the fan mail.
Alas, many of us are not as clever as Goldenberg, and not among the hedge-fund managers who have paid millions in the Win-a-lunch-with-Warren Buffet charity auction that has been running since 2000. The most ever-paid for the honor was $2.1 million; in this past year the price paid was $1.7 million.
Indeed, our glimpses of the investing world's oracle are fleeting, and often flicker into our purview only by way of quarterly portfolio holdings reports sent to the Securities and Exchange Commission, detailing what Buffett and Berkshire Hathaway have been buying and selling in the most recent quarter.
For the most of us capitalist plebeians, our chance to debate the grand master of the market's moves is limited to commentary on the quarterly changes in the Berkshire Hathaway portfolio -- and the past week was one of those Berkshire Hathaway quarterly reporting weeks. And by comparison to previous quarters, it was a noteworthy one in terms of Buffett's trading -- a
net-selling of stocks on a level that is atypical for the Oracle of Omaha .
In addition to Buffett,
hedge fund greats George Soros and
John Paulson also released their quarterly portfolio changes in filings with the Securities and Exchange Commission last week, with
big Soros and Paulson bets revealed on
All this trading activity from the investing world's bigwigs provides us little people, armed with little more than our
Wall Street Journal
copies and the glare from
, with the chance to chime in on the biggest buys and sells in the market by the biggest buyers and sellers. And so, in the case of Buffett, we asked
Which of Warren Buffett's latest trading decision do you think was the wisest?
The results indicated that while investors continue to agree with Buffett on many stock sells that Berkshire Hathaway has been executing throughout 2009, there were some recent sells by Buffett for which the investing community evinced less enthusiasm.
Approximately 39% of survey takers indicated that Buffett's decision to increase stakes in
in the fourth quarter was the wisest of the Oracle of Omaha's trading decisions.
No surprise there. Buffett has recently been quoted on television saying that he does not think Wells Fargo will ever disappoint on revenues, and so, it's fair to assume that Wells Fargo may be one of the Berkshire Hathaway stocks that qualifies for the famed Buffett holding period of "forever."
Approximately 19% of survey takers thought that the wisest decision made by Buffett in the fourth quarter was to sell shares of
Both ConocoPhillips and Moody's have been Berkshire Hathaway dogs throughout 2009, with selling activity going back to the first quarter, and both have been underperformers in the past year also. Buffett's decision to continue to shed positions in these stocks, therefore, was not among the quarterly surprises, though there was a notable increase in Berkshire Hathaway's selling of energy stocks more generally in the previous quarter.
Buffett was also busy shedding shares of managed-care stocks throughout 2009, and extensively sold both
in the fourth quarter, selling approximately 2 million shares of each.
Managed care stocks had gone on a big rally towards the second half of 2009, and WellPoint had run up as much as any of the managed care stocks. UnitedHealth, on the other hand, was considered the big managed-care underperformer of 2009, and some analysts had thought coming into 2010 it was the managed care stock with the most room to move up.
Possibly, UnitedHealth's rebound potential is the reason why only 14% of investors think that Buffett's selling of these stocks was his wisest trading move in the fourth quarter.
Health care related stocks, in general, were out of favor with Buffett. And the biggest disagreement between Buffett and
survey takers came over two fourth-quarter Berkshire Hathaway sales of big global brands, brands bridged by ampersands.
Berkshire Hathaway sold both
Johnson & Johnson
Procter & Gamble
in the fourth quarter, and survey respondents didn't show much support for that trading decision.
Only 8% of survey takers think that the selling of Johnson & Johnson and Procter & Gamble was the wisest of the Berkshire Hathaway fourth quarter moves. This is not surprising, either. Bill Bergman, an analyst at Morningstar who covers Berkshire Hathaway, said that when he reviewed the quarterly portfolio moves, the decision by Buffett to sell 10 million shares of Johnson & Johnson was the most surprising, based on Morningstar's outlook for the drug stock.
It's notable that both Johnson & Johnson and Procter & Gamble reached 52-week highs during the fourth quarter, and both rallied significantly in the quarter also, from short-term troughs in the third quarter of 2009. With Buffett building up his war chest for the acquisition of Burlington Northern, and these stocks appreciating nicely in the fourth quarter, maybe the larger picture at Berkshire Hathaway allowed for some good stocks to fall out of the Buffett holding grace period of "forever."
Both Johnson & Johnson and Procter & Gamble are still trading near the 52-week high levels from the fourth quarter on Monday, too.
Some long-time Berkshire Hathaway investors have indicated that all the selling activity in the fourth quarter by Buffett shows his editing of the portfolio with the theme of the stocks he believes are most fundamentally tied to the U.S. economy.
So it's possible a drug stock like Johnson & Johnson failed the Berkshire Hathaway equivalent of an FDA advisory review panel, not necessarily because of any specific weakness, but because it did not fit the larger, ever-evolving Berkshire Hathaway model.
It's a model investors will continue to monitor, and at least have the opportunity to comment on, once a quarter.
-- Reported by Eric Rosenbaum in New York.
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