Earlier this week, the SEC gave us a peek into Berkshire Hathaway’s(BRKa BRKb) current stock holdings. Berkshire Hathaway filed a Form 13F-HR detailing their major stock holdings as of June 30, 2005. Most of the large holdings listed on this form were stock selected by Warren Buffett but others could have been purchased by one of Berkshire Hathaway’s subsidiaries.
It appears that Warren Buffett may have been involved in the purchase of over $231 million worth of shares in Sun Trust Banks (STI). I was a bit surprised by this retail bank purchase given the current trends in interest rates, but there might be more to Sun Trust than meets the eye. I may need to look a bit more closely at this one.
Another surprising stock purchase involves Berkshire Hathaway’s recent holdings in both major home improvement retailers, Home Depot (HD) and Lowe’s (LOW). This virtual duopoly does have a wide moat in the home improvement retail sector. I would, however, be a little nervous buying these two stocks considering the potential that the current red hot housing market might slow down and/or interest rates could climb. I think that either of these two events would slow down sales of home improvement products, but with people potentially staying put in their homes they may also continue to spend on smaller, but necessary, home improvements. It is interesting to note that Berkshire Hathaway selected both of these retailers versus picking a winner between the two.
One clear value opportunity in my mind was Warren Buffett’s purchase of Tyco (TYC). The legal problems surrounding this company have dropped the price of this stock dramatically. The recent guilty verdicts against former CEO Dennis Kozlowski and other top executives have created a great entry point into this stock. However, there has been some dramatic changes in leadership that may result in a good future for this conglomerate.
Finally, Berkshire Hathaway purchased $65 million worth of Lexmark (LXK). This purchase does not look like a typical Warren Buffett purchase, but it might be the work of Lou Simpson of Geico. The price of Lexmark has dropped dramatically over the past six months and now has a P/E of 15. However, there is intense competition in the computer printer market. It will be interesting to see how Berkshire Hathaway does with this investment, along with their other new purchases, in the long-term.