Warren Buffett (Trades, Portfolio)'s $486 billion conglomerate, Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B), disclosed its equity portfolio for the fourth quarter of 2019 on Friday, listing new positions in The Kroger Co. (NYSE:KR), Biogen Inc. (NASDAQ:BIIB), the SPDR S&P 500 (SPY) and the Vanguard S&P 500 (VOO).
With a record $128 billion to spend on stocks, the renowned guru and his two portfolio managers, Ted Weschler and Todd Combs, also added to the conglomerate's holdings of Occidental Petroleum Corp. (NYSE:OXY), Suncor Energy Inc. (NYSE:SU), General Motors Co. (NYSE:GM) and RH (NYSE:RH).
The long-term investors also reduced its positions in Wells Fargo & Co. (NYSE:WFC), Goldman Sachs Group Inc. (NYSE:GS), The Travelers Companies Inc. (TRV), Apple Inc. (AAPL), Phillips 66 (PSX), Bank of America Corp. (BAC), American Airlines Group Inc. (AAL) and Bank of New York Mellon Corp. (BK).
Valued at $242.05 billion, the equity portfolio consists of 52 stocks as of the end of the fourth quarter. Nearly half the portfolio was invested in financial services stocks at 43.32%, while the technology sector has a weight of 31% and the consumer defensive space represents 14.26%.
Buffett's five largest holdings as of the end of the quarter, accounting for over half of the portfolio, were Apple, Bank of America, The Coca-Cola Co. (KO), American Express Co. (AXP) and Wells Fargo.
Buffett invested in 18.9 million shares of Kroger, dedicating 0.23% of the equity portfolio to the stake. The stock traded for an average price of $26.57 per share during the quarter.
The Cincinnati-based grocery store chain has a $22.52 billion market cap; its shares were trading around $28.23 on Friday with a price-earnings ratio of 14.38, a price-book ratio of 2.56 and a price-sales ratio of 0.19.
The Peter Lynch chart shows the stock is trading slightly below its fair value, suggesting it is undervalued. Although the price-sales ratio and price are near one-year highs, the GuruFocus valuation rank also implies undervaluation.
GuruFocus rated Kroger's financial strength 5 out of 10 on the back of poor interest coverage and a low cash-debt ratio of 0.03. The Altman Z-Score of 3.78, however, indicates the company is in good standing financially.
The company's profitability scored an 8 out of 10 rating despite having a declining operating margin. Kroger is also supported by returns that outperform at least half of its competitors and a Piotroski F-Score of 6, which means business conditions are stable. Its business predictability rank of five out of five stars is on watch as a result of a slowdown in revenue per share growth over the past 12 months. According to GuruFocus, companies with this rank typically see their stocks gain an average of 12.1% per annum over a 10-year period.
With his purchase of 2.37% of Kroger's outstanding shares, Buffett is now its largest guru shareholder. Jim Simons (Trades, Portfolio)' Renaissance Technologies, Pioneer Investments (Trades, Portfolio), Jeff Auxier (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Lee Ainslie (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Ken Fisher (Trades, Portfolio) and Richard Snow (Trades, Portfolio) also have positions in the stock.
The Oracle of Omaha picked up 648,447 shares of Biogen, allocating 0.08% of the equity portfolio to the holding. During the quarter, the stock traded for an average price of $279.04 per share.
The biotech company, which is headquartered in Cambridge, Massachusetts, has a market cap of $57.96 billion; its shares were trading around $333 on Friday with a price-earnings ratio of 10.56, a price-book ratio of 4.34 and a price-sales ratio of 4.33.
According to the Peter Lynch chart, the stock is undervalued. The valuation rank of 9 out of 10 also points to undervaluation.
Biogen's financial strength was rated 6 out of 10 by GuruFocus, driven by comfortable interest coverage and a robust Piotroski F-Score of 4.93.
The company's profitability scored a perfect rating of 10 out of 10 on the back of expanding margins and strong returns that outperform a majority of industry peers. Biogen is also supported by a moderate Piotroski F-Score of 6. Due to consistent earnings and revenue growth, it has a five-star business predictability rank.
PRIMECAP is Biogen's largest guru shareholder with an 8.73% stake. Other top guru investors include Simons' firm, the Vanguard Health Care Fund (Trades, Portfolio), Hotchkis & Wiley, Pioneer, Greenblatt, Fisher, Steven Cohen (Trades, Portfolio), Jones, Snow, Richard Pzena (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Auxier.
SPDR S&P 500
The guru purchased 39,400 units of the exchange-traded fund, giving it 0.01% space in the equity portfolio. The units traded for an average price of $308.48 each during the quarter.
The ETF, which tracks the performance of the S&P 500 stock market index, has a $323.7 billion market cap; its units were trading around $337.60 on Friday with a price-earnings ratio of 20.58 and a price-book ratio of 3.25.
The 14-day relative strength index of 65.5 indicates it is nearing overbought levels.
Vanguard S&P 500
The renowned investor bought 43,000 units of the ETF, impacting the equity portfolio by 0.01%. The units traded for an average price of $283.37 apiece during the quarter.
The ETF, which tracks the investment performance of the S&P 500 Indes, has a $144.9 billion market cap; its units were trading around $310.28 on Friday with a price-earnings ratio of 19.82 and a price-book ratio of 3.19.
The 14-day relative strength index of 65.6 indicates it is nearing overbought levels.
See Buffett's full portfolio here.
Disclosure: No positions.
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This article first appeared on GuruFocus.