What are Buffett and Soros Up To?

Money Morning Article of the Week

by Ben Gersten, Associate Editor, Money Morning

For those who want to model their investments after the famed Berkshire Hathaway holdings, this is your week.

Berkshire CEO Warren Buffett (pictured) along with other iconic investors such as George Soros this week revealed their second-quarter stock moves – and you may be a little more than surprised to see what they’ve been up to. The two billionaire investors disclosed their most recent investments in 13F filings, which are released by the U.S. Securities and Exchange Commission 45 days after the close of a quarter.

While Buffett has stepped back a bit from the business as he anticipates retirement, the Berkshire Hathaway holdings show he’s still the driving force behind the firm’s investing success. “Buffett continues to hold sway over a meaningful amount of the equity portfolio–something we don’t anticipate changing too significantly in the near to medium term,” wrote Morningstar analyst Greggory Warren.

Warren Buffett Drops American Giants

Warren Buffett, manager of Berkshire Hathaway Inc. (NSYE: BRK.A, BRK.B) cut holdings in American blue-chips and added some energy stocks.

The fund sold its entire stake, 7.7 million shares, in Intel Corp. (Nasdaq: INTC) and sold off 64% of its holdings in Johnson & Johnson (NSYE: JNJ).

Berkshire also cut its stakes in The Procter & Gamble Co. (NYSE: PG) and Kraft Foods Inc. (NYSE: KFT). Buffett now owns 59 million shares of PG, down 19% from the previous filing, and 58.8 million shares of Kraft, down 25%.

“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, told Bloomberg News before the filing was released.

Buffett and Berkshire did just that, initiating claims in energy and adding to some financial positions. The company added 2.84 million shares in National-Oilwell Varco Inc. (NSYE: NOV) and 27.2 million shares in Philips 66 (NSYE: PSX). Berkshire increased holdings in financial stocks Wells Fargo & Co. (NYSE: WFC) and Bank of New York Mellon Corp. (NSYE: BK). Berkshire’s position in WFC rose to 411 million shares from 394.3 million and BNY almost tripled in size to 18.7 million shares.

Buffett, 81, has been handing more investment duties to his eventual successors, Ted Weschler and Todd Combs, former hedge- fund managers hired in the past two years. “Shareholders should welcome that,” Jeff Matthews, a Berkshire investor and author of “Secrets in Plain Sight: Business & Investing Secrets of Warren Buffett,” told Bloomberg. “Better to find out now if they’re up to the task.”

Soros Buys Facebook (Nasdaq: FB), Gold

Soros, manager of Soros Fund Management LLC, reported new stakes in Facebook Inc. (Nasdaq: FB) and Wal-Mart Stores Inc. (NSYE: WMT) and abolished his shares in financials. The hedge fund manager picked up 341,000 shares of Facebook valued at $10.6 million at the end of the second quarter. Facebook finished the quarter, which ended June 30, at $30 a share. That means Soros has lost at least $3 million since then, assuming he holds the same number of shares.

For Soros’s sake let’s hope he didn’t purchase the social-networking company at its $38 IPO price, putting him on the hook for even deeper losses. Facebook stock closed Wednesday just above $21.

Soros also added 4.8 million shares in Wal-Mart worth $337 million, making it the third-largest position in the fund’s portfolio.

Soros, like many investors, is wary of the financial sector after months of ongoing banking scandals have shaken investor confidence. He ditched 606,400 shares of JPMorgan Chase & Co. (NYSE: JPM) -plus a 95,000 share call option-120,000shares of Goldman Sachs (NYSE: GS), 537,000 shares of Wells Fargo and 420,000shares of Citigroup Inc. (NYSE: C).

Soros also added to his stake in gold, raising his stake in the SPDR GoldTrust (NYSEArca: GLD), a gold-backed exchanged-traded fund, to 884,400 shares, from319,550 shares in the prior period. “It’s all about easing, and people are especially waiting for the Fed since investors expect prices will rise if the central bank announces more bond purchase.” Walter “Bucky” Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, AL told Bloomberg. “People are willing to hold on to gold to see what the Fed will say.”

Overall, the value of Soros’s holdings rose slightly to $6.9 billion, from$6.8 billion in the first quarter. Soros reported a 16% decrease in the number of total holdings to 168 positions. Buffett’s Berkshire Hathaway (NYSE: BRK.A, BRK.B) is up nearly 11% this year.

Related Articles and News:

• Money Morning: Why Warren Buffett is Loading Up on Tungsten

• Money Morning: Warren Buffett Stocks: Where the Oracle of Omaha Puts his Money

• Bloomberg News: Paulson, Soros Adds Gold As Price Declines Most Since 2008

• Bloomberg News: Berkshire Cuts Johnson & Johnson Stake

• Morningstar: Buffett’s Lieutenants Continue to Impact Berkshire’s Portfolio

• Global Economic Intersection: Other Money Morning Articles of the Week

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