Berkshire's common stock investments

Investments

Below we show our common stock investments that at year end had a market value of more than $1 billion.

12/31/09

Shares
Company
Percentage of Company Owned
Cost *
Market
(in millions)

151,610,700
American Express Company . . . . . . . . . . . . . . . . . . . . . . . .
12.7
$ 1,287
$ 6,143

225,000,000
BYD Company, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.9
232
1,986

200,000,000
The Coca-Cola Company . . . . . . . . . . . . . . . . . . . . . . . . . .
8.6
1,299
11,400

37,711,330
ConocoPhillips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.5
2,741
1,926

28,530,467
Johnson & Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.0
1,724
1,838

130,272,500
Kraft Foods Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.8
4,330
3,541

3,947,554
POSCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.2
768
2,092

83,128,411
The Procter & Gamble Company . . . . . . . . . . . . . . . . . . . .
2.9
533
5,040

25,108,967
Sanofi-Aventis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.9
2,027
1,979

234,247,373
Tesco plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.0
1,367
1,620

76,633,426
U.S. Bancorp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.0
2,371
1,725

39,037,142
Wal-Mart Stores, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.0
1,893
2,087

334,235,585
Wells Fargo & Company . . . . . . . . . . . . . . . . . . . . . . . . . .
6.5
7,394
9,021

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,680
8,636

Total Common Stocks Carried at Market . . . . . . . . . . . . . .
$34,646
$59,034

*This is our actual purchase price and also our tax basis; GAAP “cost” differs in a few cases because of write-ups or write-downs that have been required.

In addition, we own positions in non-traded securities of Dow Chemical, General Electric, Goldman Sachs, Swiss Re and Wrigley with an aggregate cost of $21.1 billion and a carrying value of $26.0 billion. We purchased these five positions in the last 18 months. Setting aside the significant equity potential they provide us, these holdings deliver us an aggregate of $2.1 billion annually in dividends and interest. Finally, we owned 76,777,029 shares (22.5%) of BNSF at year end, which we then carried at $85.78 per share, but which have subsequently been melded into our purchase of the entire company.

In 2009, our largest sales were in ConocoPhillips, Moody’s, Procter & Gamble and Johnson & Johnson(sales of the latter occurring after we had built our position earlier in the year). Charlie and I believe that all of these stocks will likely trade higher in the future. We made some sales early in 2009 to raise cash for our Dow and Swiss Re purchases and late in the year made other sales in anticipation of our BNSF purchase.

We told you last year that very unusual conditions then existed in the corporate and municipal bond markets and that these securities were ridiculously cheap relative to U.S. Treasuries. We backed this view with some purchases, but I should have done far more. Big opportunities come infrequently. When it’s raining gold, reach for a bucket, not a thimble.

We entered 2008 with $44.3 billion of cash-equivalents, and we have since retained operating earnings of $17 billion. Nevertheless, at year end 2009, our cash was down to $30.6 billion (with $8 billion earmarked for the BNSF acquisition). We’ve put a lot of money to work during the chaos of the last two years. It’s been an ideal period for investors: A climate of fear is their best friend. Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance. In the end, what counts in investing is what you pay for a business – through the purchase of a small piece of it in the stock market – and what that business earns in the succeeding decade or two.

http://www.berkshirehathaway.com/letters/2009ltr.pdf

FACTBOX: Berkshire's Buffett on succession, acquisitions

FACTBOX: Berkshire's Buffett on succession, acquisitions
Sat May 2, 2009 3:30pm EDT



(Reuters) - Berkshire Hathaway Inc, the insurance and investment company run by Warren Buffett, has been preparing succession plans for when the 78-year-old billionaire steps down. It also still hunts for acquisitions, preferably large.

In 2008 Berkshire spent $6.1 billion on acquisitions. It spent $4.5 billion for a 60 percent stake in Marmon Holdings Inc, which was owned by the Pritzker family of Chicago and makes such things as railroad tank cars, plumbing pipes, metal fasteners, and wiring and water treatment products used in residential construction. Berkshire later boosted its stake to 63.6 percent.

Berkshire also made a series of large investments in 2008, including $6.5 billion to help fund Mars Inc's purchase of chewing gum company Wm Wrigley Jr Co. It also invested $5 billion in Goldman Sachs Group Inc and $3 billion in General Electric Co.

Berkshire ended 2008 with $25.54 billion in cash. Buffett has repeatedly said he would like to keep $10 billion on hand.

The company is holdings its annual meeting on Saturday in Omaha, Nebraska.

The following information about Buffett's succession plans and Berkshire's acquisition strategy is drawn from the company's 2007 and 2008 annual reports:

BUFFETT ON HIS POTENTIAL SUCCESSORS (FROM 2007 REPORT)

"We have for some time been well prepared for CEO succession because we have three outstanding internal candidates. The board knows exactly whom it would pick if I were to become unavailable, either because of death or diminishing abilities. And that would still leave the board with two backups.

"We have indeed now identified four candidates who could succeed me in managing investments. All manage substantial sums currently, and all have indicated a strong interest in coming to Berkshire if called. The board knows the strengths of the four and would expect to hire one or more if the need arises. The candidates are young to middle-aged, well-to-do to rich, and all wish to work for Berkshire for reasons that go beyond compensation."

ACQUISITION CRITERIA (FROM 2008 REPORT)

"We are eager to hear from principals or their representatives about businesses that meet all of the following criteria:

(1) Large purchases (at least $75 million of pretax earnings unless the business will fit into one of our existing units),

(2) Demonstrated consistent earning power (future projections are of no interest to us, nor are 'turnaround' situations),

(3) Businesses earning good returns on equity while employing little or no debt,

(4) Management in place (we can't supply it),

(5) Simple businesses (if there's lots of technology, we won't understand it),

(6) An offering price (we don't want to waste our time or that of the seller by talking, even preliminarily, about a transaction when price is unknown).

"The larger the company, the greater will be our interest: We would like to make an acquisition in the $5-20 billion range... We will not engage in unfriendly takeovers... We prefer to buy for cash, but will consider issuing stock when we receive as much in intrinsic business value as we give."

(Reporting by Jonathan Stempel in Omaha, Nebraska)





http://www.reuters.com/article/topNews/idUSTRE54127T20090502?pageNumber=2&virtualBrandChannel=0&sp=true