Thursday, November 24, 2005

Berkshire's Surprise

It’s official. This week Berkshire Hathaway submitted filings to the SEC disclosing its position in Anheuser-Busch (NYSE: BUD). Mr. Buffett has been accumulating shares since Q4 of 2004. He initiated a position with 9 million shares and has accumulated just over 44 million shares through Q3 of this year. By the end of Q2, Berkshire had 40 million shares of BUD.

The biggest surprise was the disclosure of a stake in Wal-Mart (NYSE: WMT) to the tune of $870 million! The majority of that position was built through Q2 with 15 million shares. An additional 5 million shares were added in Q3. In recent months, there have been numerous articles, including one from Barron’s in early October, discussing Wal-Mart as potentially undervalued by a wide margin. Barron’s noted that Mr. Buffett has on numerous occasions mentioned his failure to take a full position in Wal-Mart in the late 90’s as one of the biggest mistakes of his investment career. At the time, Wal-Mart was trading at much higher multiples than today. The bottom-line is that Wal-Mart has one of the widest moats of them all. And when a company of this quality is trading at the same multiple as the S&P 500, you don’t hesitate. Just load up!

As I have noted in my previous posts, I have taken positions in both of these companies in recent months. I have to say it feels good to know the best investor of our lifetime, perhaps ever, is on my side.

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