Buffett Bullish on MasterCard, Dollar General

BOSTON ( TheStreet) -- Warren Buffett's Berkshire Hathaway ( BRK.B) is increasingly liking the prospects of MasterCard ( MA), as it doubled a stake in the credit card processor in the second quarter after first buying shares three months earlier.

Berkshire Hathaway's 27-stock investment portfolio was valued at $52.4 billion June 30, down $1.2 billion, or 2.2%, in three months and about where it was at the start of the year, according to a filing Monday. The benchmark S&P 500 Index, in contrast, is down 5% this year.
Warren Buffett

Berkshire's allocation to Coca-Cola ( KO), its largest holding at 25% of the portfolio, was unchanged in the second quarter, valued at $13.5 billion. The soft drink maker's shares are up 3.5% this year and up 24% over the past 12 months.

Buffett's holding company added to Wells Fargo ( WFC), its second-largest holding, at 19% of the portfolio.

Berkshire Hathaway trimmed its Kraft Foods ( KFT) stake by 5.5%, but it's still the fifth-biggest holding at 6.7% of the portfolio.

About a week ago, Kraft announced it was splitting up into two companies, a global-snacks unit and a North American grocery business. Buffett, 80, who is chairman and chief executive officer of Berkshire Hathaway, said he supported the move.

>>View Warren Buffett's Portfolio

But he criticized the company's management in January 2010 when it announced the $19.6 billion acquisition of the candy company Cadbury, calling it "a bad deal."

Nevertheless, Kraft's shares are up 11% this year and 21% over the past 12 months.

Hedge and investment funds like Buffett's that manage more than $100 million are required to disclose their equity holdings, options and convertible debt on a Form 13F filed to the Securities and Exchange Commission within 45 days of the end of a quarter. Funds aren't required to report short positions betting on declines.

The following pages break down the stock performance of Buffett's newest holdings.

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In one of Berkshire's biggest moves in the second quarter, it nearly doubled its stake in MasterCard ( MA) to 405,000 shares as of June 30, from 216,000 shares March 31.

MasterCard manages a group of global payment card brands, including MasterCard, Maestro and Cirrus, which it licenses to financial institutions that issue cards to their customers. The firm acts as the payment processor. The company's shares are up 47% this year and 55% over the past 12 months.

Morningstar analyst Michael Kon writes that the company has many competitive advantages, and "MasterCard is one of the few companies set to benefit from the global trend of moving away from cash and checks toward electronic forms of payment, including cards. This shift, along with increased acceptance of cards for almost any type of payment, is a fertile field of long-term growth for MasterCard."


Buffett initiated a small stake in the discount retail chain Dollar General ( DG), and now has a $51 million position.

Dollar General would appear to be a bet that consumers will continue to pinch pennies -- or in this case dollars -- as the economy drags along as its goods appeal to low-income consumers. Dollar General's shares are up 3% this year and 9% over the past 12 months.

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Berkshire Hathaway opened a new holding in Verisk Analytics ( VRSK), a provider of risk-related data and analytics services to the insurance, health-care and mortgage industries. It bought 210,000 shares, which were valued at $73 million June 30. Verisk's shares are down 5.5% this year, but up 14% over the past 12 months.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.