Tags: Believe | Buffett | Buys | Headline

CNNMoney: Don't Believe Every ‘Buffett Buys...’ Headline

By    |   Tuesday, 28 February 2012 01:32 PM

If you're following the news to see what Warren Buffett has just bought, hoping to follow his example to eventually make a profit, there's a catch.

There's a chance that Buffett didn't make the stock picks.

Newspaper headlines beginning "Buffett buys ..." are often wrong. Chances are that other Berkshire Hathaway managers made decision, notes Carol Loomis, Fortune senior editor-at-large.

For instance, news outlets reported that Buffett bought MasterCard, Visa, and Dollar General. Wrong. That was Todd Combs, former manager of the Connecticut hedge fund Castle Point Management, who Berkshire Hathaway hired in 2010.

The media outlets examining Berkshire's 2011 yearend 13F filing reported that Buffett bought DirecTV, DaVita, as well as Liberty Media.

Wrong again.

Those investments were not even made by an active Berkshire manager. Ted Weschler acquired those investments while head of Peninsula Capital Advisors.

With Buffett's approval, he transferred those stocks to Berkshire after joining Buffett's team in 2011.

Going back even earlier, purchases made by Lou Simpson, who has since left Berkshire, were often attributed to Buffett. It was Simpson, not Buffett, who bought Carmax stock in 2007.

So what did Buffett himself buy? Almost $11 billion of IBM, an additional $1 billion n Wells Fargo, and $5 billion of preferred stock in Bank of America.

The IBM investment has returned Berkshire a gain of about $j900 million, and Buffett said Wells Fargo was prospering and "banking is back on its feet."

Warrants allow Berkshire to buy 700 million of common shares in Bank of America at $7.14 a share until 2021, which Buffett called "a great value."

Combs and Weschler will have important roles in the company's post-Buffett days.

They have the "brains, judgment and character" to manage Berkshire's entire portfolio, Buffett said, according to Newsday. Combs built a $1.75 billion portfolio last year and Weschler is also now working on building a huge portfolio.

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Tuesday, 28 February 2012 01:32 PM
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