Bloomberg News

Berkshire Cuts Johnson & Johnson, Adds National Oilwell

August 14, 2012

Berkshire Cuts Johnson & Johnson, Adds National Oilwell Stake

Berkshire Hathaway Inc. held 10.3 million shares of Johnson & Johnson on June 30. Photographer: Tim Boyle/Bloomberg

Berkshire Hathaway Inc. (A:US) cut its stakes in Johnson & Johnson and Kraft Foods Inc. (KFT:US) as billionaire Chairman Warren Buffett made more funds available for the portfolios managed by deputy stock-pickers.

Buffett’s firm held 10.3 million shares of J&J on June 30, compared with 29 million on March 31, his Omaha, Nebraska-based company said today in a filing disclosing U.S. stockholdings at the end of the second quarter. The Kraft holding fell 25 percent to 58.8 million shares. Berkshire disclosed a stake in Houston- based oilfield-equipment maker National Oilwell Varco Inc. (NOV:US) of 2.84 million shares.

Berkshire’s cash hoard swelled to more than $40 billion (2FA:US) in the period as the company sold equities and earnings climbed (2FA:US) at insurance units and railroad Burlington Northern Santa Fe. Buffett has been weighing acquisitions and adding to the funds overseen by investment managers Ted Weschler and Todd Combs.

“Warren has always said, as he talked about other positions he’s sold, that the best discipline for selling is if you have something better to do with the money,” Tom Russo, a partner at Berkshire investor Gardner Russo & Gardner, said in a phone interview before the filing was released.

Buffett, 81, told investors at a shareholder meeting in May that he couldn’t come to an agreement on a potential deal valued at about $22 billion in recent months. Berkshire hasn’t struck a deal (2FA:US) larger than $1 billion since it bought engine-additives maker Lubrizol Corp. for about $9 billion last year.

Weschler, Combs

Buffett has been preparing Berkshire for his eventual departure, in part by hiring Weschler and Combs, former hedge- fund managers, to help oversee the $86.2 billion stock portfolio. Buffett has said he makes larger wagers while the deputies are responsible for smaller bets, such as a stake in General Motors Co. disclosed in May. Each will oversee about $4 billion, compared with $2.75 billion at the beginning of the year, Buffett told Betty Liu last month in an interview on Bloomberg Television.

The National Oilwell holding was valued at about $183 million at the end of the second quarter. The stock advanced 1.2 percent to $77.16 in extended trading at 4:44 p.m. in New York after Berkshire’s filing. The stake in Bank of New York Mellon Corp. more than tripled to 18.7 million shares, valued at about $410 million as of June 30.

J&J, Kraft

Johnson & Johnson (JNJ:US), the world’s biggest health-products maker, was ordered in April to pay more than $1.1 billion in fines after an Arkansas jury found the firm misled doctors and patients about the risks of antipsychotic medication Risperdal. The New Brunswick, New Jersey-based company has also struggled with recalls of artificial hip implants and over-the-counter medicines.

“It’s still got a lot of wonderful products and it’s got a wonderful balance sheet and all of that, but there have been too many mistakes,” Buffett told CNBC in a Feb. 27 interview.

Kraft is planning to split its snacks business from its U.S. grocery unit on Oct. 1. The snack division, which sells products including Oreo cookies and Newtons overseas, will be renamed Mondelez International Inc. after the split. Buffett said in 2010 that Kraft’s takeover of Cadbury Plc and the sale of its pizza brands were “dumb” moves.

Berkshire’s stake in Procter & Gamble Co. (PG:US), the maker of Gillette razors and Tide detergent, declined 19 percent to 59.6 million shares in the three months ended June 30. Buffett’s firm eliminated a stake in Intel Corp. (INTC:US), the world’s largest semiconductor maker. Berkshire had held about 7.7 million shares on March 31.

Intel, based in Santa Clara, California, fell as much as 1.1 percent in extended trading following the filing. The stock had earlier closed down 0.8 percent at $26.48 in New York trading, leaving it up 9.2 percent this year.

Buffett largest stakes, valued at more than $10 billion each, were in Coca-Cola Co. (KO:US), Wells Fargo & Co. (WFC:US) and International Business Machines Corp. as of June 30.

To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net.

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net


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