Berkshire Hathaway (NYSE: BRK.A) recently posted a cash boom, as their holdings increased to $40.7 billion or 7.5 percent in a three-month period ending June.
Under Buffett’s guidance, Berkshire reduced its dealings with consumer-products stocks and lowered its interest in companies involved with consumer goods. Simultaneously, Berkshire ramped up shares of financial, commercial, and industrial firms.
“Why keep his old names that served a purpose for a while and have gone up,” Tom Russo, a partner at Berkshire investor Gardner Russo & Gardner, said in a phone interview. Some of the consumer stocks “have various forms of blemishes.”
Buffett pointed out that he had been unable to agree on a potential $22 billion acquisition back in May. Buffett tends to seek out one solid buyout every year. However, Berkshire has not exceeded $1 billion in single deals since it bought Lubrizol Corp. for around $9 billion last year, Bloomberg reports.
But with Berkshire’s increased cash holdings, the company now commands a formidable buyout ability should the Oracle become interested in something big.
In the second quarter, Berkshire sold equities worth $30.1 billion and bought just $1.85 billion in stock. The consumer portfolio’s cost basis dropped from over $12 billion to $9.84 billion. Figures for financial and commercial holdings rose slightly.
Some notable holdings shifts include a sharp reduction in Johnson & Johnson (NYSE: JNJ) shares (from 42.6 million at the end of 2010 to 29 million as of this March), and similar changes in Procter & Gamble (NYSE: PG) shares (down to 73.3 million shares, or a decline of 4.6 percent).
Coca Cola (NYSE: KO) holdings likely remained stable, and Wal-Mart (NYSE: WMT) holdings increased, in line with Buffett’s recent expressions of faith in the retail giant.