Warren Buffett goes on $1.2 billion selling spree

Warren Buffett’s investment giant Berkshire Hathaway went on a selling spree at the end of 2010, raising about $1.2 billion by selling its stakes in global giants including Nestle, Nike and Lowe’s.

Buffett surprised the market by selling down his five-million-share stake in Bank of America, the value of which has tumbled by two thirds during the past three-and-a-half years.

Other stakes to disappear from Berkshire’s holdings included cable television giant Comcast, water treatment group Nalco Holdings, medical equipment company Becton, Dickinson & Co and financial services software group Fiserv, Inc.

Lowe’s, which will become well known to Australians in coming years as it ramps up its home hardware joint venture with Woolworths, was the company hardest hit by news of Buffett’s sales, with its stock falling 1.5% overnight.

Buffett’s portfolio is now the smallest it has been in years in terms of the number of investments held – there are just 25 companies in what is now a very concentrated portfolio that is worth $US52.6 billion, up from $US48.6 billion in November 2010 despite the swag of sales.

The jump can be explained in by the increase in share prices of bank Wells Fargo and beverage giant Coca-Cola, in which Berkshire has big stakes.

The purchase of extra shares in Wells Fargo was the only buy Buffett made during the period.

But the sale of shares shouldn’t be taken as a sign that Buffett is suddenly negative on the share market – most of the unloaded holdings were part of a portfolio run by top Buffett lieutenant Lou Simpson, who was responsible for the portfolio owned by Berkshire Hathaway car insurance subsidiary Greico. 

Buffett is in the process of reshuffling his money management team slightly and as Simpson departs, 40-year-old fund manager Todd Combs, seen as a potential successor to Buffett, is set to take control of a portfolio of about $3 billion.