Editor’s Note: Related tickers: Berkshire Hathaway Inc. (NYSE:BRK.A), The Coca-Cola Company (NYSE:KO), General Motors Company (NYSE:GM), M&T Bank Corporation (NYSE:MTB), National-Oilwell Varco, Inc. (NYSE:NOV), Mondelez International Inc (NASDAQ:MDLZ).
We track quarterly 13F filings from hundreds of hedge funds and other notable investors, including Warren Buffett’s holding company Berkshire Hathaway Inc. (NYSE:BRK.A). One use of this information is in developing investment strategies; we have found that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year, and we think that more techniques are possible as well. It’s also possible to go through individual managers’ filings in search of stocks which meet certain criteria, including stocks recently bought by company insiders. We have gone through Berkshire Hathaway Inc. (NYSE:BRK.A)’s most recent 13F filing and here are its five largest holdings which at least one insider has bought in the last three months:
Longtime Buffett favorite The Coca-Cola Company (NYSE:KO) had an insider purchase a small number of shares in March at an average price of $39.16 per share; Berkshire Hathaway Inc. (NYSE:BRK.A) owned 400 million shares of the soft drink company at the end of the quarter. High demand for safe investments (The Coca-Cola Company (NYSE:KO) makes for a good defensive pick, with a beta of 0.4 and a dividend yield close to 3%) has driven up the stock quite a bit from our perspective- it is currently valued at over 20 times trailing earnings, even with net income slipping last quarter compared to the first quarter of 2012. As a result we’re not particularly excited about The Coca-Cola Company (NYSE:KO).
A vice president at General Motors Company (NYSE:GM) was buying the stock in early May at an average price of $31.92 per share. Buffett, meanwhile, maintained a stake of 25 million shares through Q1. Many value investors have been buying into General Motors Company (NYSE:GM), arguing that an aging U.S. consumer auto fleet is setting automakers up for a turnaround. Wall Street analysts are bullish on General Motors Company (NYSE:GM), with their earnings forecasts placing the current stock price at a forward P/E of 8 and a five-year PEG ratio of 0.6. However, as with The Coca-Cola Company (NYSE:KO) the company’s financials have been slipping and so we’d be cautious despite these attractive valuation metrics.
M&T Bank Corporation (NYSE:MTB) carries trailing and forward P/Es of 13 and 12, respectively, though its tougher to call it a value stock if we look at its book value (the P/B ratio is 1.4) and many large banks are trading at similar or lower earnings multiples. Business has been strong at M&T Bank Corporation (NYSE:MTB), however, and it might be a good idea to watch it for another quarter or so.
Buffett increased his holdings of National-Oilwell Varco, Inc. (NYSE:NOV) by 41% between January and March, and a Board member at the company bought a little over 1,100 shares at the end of April. At a market capitalization of $29 billion, the oilfield equipment and services company is valued at 12 times its trailing earnings. The sell-side is looking for strong growth here over the next several years, and as a result its five-year PEG ratio is 0.8. We’d note that the industry in general has similar valuations and growth expectations, so National-Oilwell Varco, Inc. (NYSE:NOV) should be compared with its peers before buying.
Berkshire Hathaway Inc. (NYSE:BRK.A)’s 13F shows that it was cutting its stake in Mondelez International Inc (NASDAQ:MDLZ) during the quarter, but still closed March with 7.1 million shares in its portfolio. The global snack foods company, formed from the breakup of Kraft, also saw an insider purchase within the last three months. Thanks in part to Buffett’s own purchase of Heinz (as well as the interest in defensive names which we mentioned earlier), food stocks have been getting significant interest in general; in addition, it has been speculated that Mondelez International Inc (NASDAQ:MDLZ) in particular may merge with Pepsico. The stock currently trades at 18 times forward earnings estimates.
Disclosure: I own no shares of any stocks mentioned in this article.
