Berkshire Hathaway Inc. (A:US) reported a stake in Suncor Energy Inc. (SU) and added to a holding in General Motors Co. (GM:US) as billionaire Chairman Warren Buffett and his deputies spent the most on stocks in a quarter since 2011.
Buffett’s firm owned 17.8 million Suncor shares on June 30, a stake valued at more than $500 million in the Calgary-based heavy-oil producer, Berkshire said today in a regulatory filing. The company also added to its holdings in U.S. Bancorp and Wells Fargo & Co. (WFC:US) The filing omitted some data that was reported confidentially to regulators.
The billionaire’s preference for buying stocks and businesses rather than bonds has helped his company weather a spike in interest rates this year. Omaha, Nebraska-based Berkshire’s equity portfolio (A:US), which is about three times larger than its fixed-income holdings, rallied past $100 billion in the second quarter.
“His portfolio has been moving up nicely,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business who has taken students to meet Buffett in Omaha. His allocation to stocks “not only has been the right strategy until now, it’s very likely to be the right strategy going forward.”
Canadian oil companies including Suncor have benefited as the gap between oil-sands crude grade Western Canada Select and U.S. benchmark West Texas Intermediate narrowed from a record $42.50 a barrel in December. Producers are working around a shortage of pipelines that was depressing Canadian heavy-crude prices by moving more volumes to market by rail.
Suncor climbed 2 percent to C$34.48 at 11:32 a.m. in Toronto. The oil producer has advanced 5.4 percent this year.
“There’s been a retreat in U.S. investor interest in the oil-sands,” said Sam La Bell, an analyst at Veritas Investment Research in Toronto. Berkshire is “taking a stake when I think a lot of the U.S. market has definitely backed off.”
The stake in Detroit-based GM rose 60 percent to 40 million shares. The automaker fell 2.5 percent today to $34.70 in New York, valuing the holding at about $1.4 billion.
GM is introducing 18 new and refreshed vehicles this year in the U.S., transforming its lineup into one of the newest in the industry from the one of the oldest. The new products along with the U.S. government’s plans to exit its ownership (GM:US) of GM after a 2009 rescue have given investors increased confidence in the automaker.
Berkshire’s Bank of New York Mellon Corp. (BK:US) investment climbed by 5.7 million shares to 24.6 million, valued at more than $700 million. Buffett’s company also reported a holding of about 550,000 shares in Dish Network Corp. (DISH:US), the satellite-TV company controlled by billionaire Charles Ergen. Berkshire exited a stake in newspaper publisher Gannett Co. in the quarter and cut bets on Kraft Foods Group Inc. (KRFT:US) and Mondelez International Inc. (MDLZ:US), the maker of snacks such as Oreo cookies.
As chairman and chief executive officer for more than four decades, Buffett, 82, transformed Berkshire from a failing textile maker into a $287 billion business. The company’s more than 80 units operate trains and planes (A:US), insure against car crashes and earthquakes and sell products from chocolate to running shoes. Berkshire also holds the largest equity stakes (A:US) in Coca-Cola Co. and Wells Fargo.
Buffett calls those two holdings, along with American Express Co. (AXP:US) and International Business Machines Corp. (IBM:US), his “big four.” He told investors in a March letter that they should rejoice that their share of the businesses’ future earnings will climb over time with buybacks.
“Mae West had it right,” he wrote. “Too much of a good thing can be wonderful.”
The U.S. Securities and Exchange Commission sometimes allows companies to withhold data from the public to limit copycat investing while a firm is building or cutting a position. Buffett’s firm requested confidential treatment in 2011 filings, as the billionaire spent more than $10 billion amassing the stake in IBM.
Buffett’s track record of compounding shareholders’ money and plainspoken way of explaining business has made him a cult figure for investors. Berkshire’s quarterly filings (A:US) of its U.S. stock holdings are studied by mutual funds and individuals looking for clues about his investment strategy.
Some of the recent stock purchases have been made by Todd Combs and Ted Weschler, money managers hired in the past three years to oversee a portion of the portfolio. The filing doesn’t say who is responsible for each pick. Buffett has said the larger holdings are typically his.
Berkshire said in a separate filing this month that it spent about $4.64 billion on stocks in the three months ended June 30. The last time the company bought that much was in the third quarter of 2011 when Buffett was building the IBM stake.
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