I observe market sentiment is not where it was, but we called for an advance of gargantuan proportio...
03/18/2016 9:00 am EST
Warren Buffett appears to be shaking up his portfolio and making a flight to safety—pivoting his investments into safe dividend stocks, observes Marshall Hargrave of Investor’s Alley.
He won’t tell investors how he’s positioning himself for a rocky year. Still, we’ve combed through his portfolio to find what Buffett was buying in the fourth quarter.
Plus, many of these stocks are now available for even cheaper than what Buffett paid back in the 4th quarter of 2015.
Wells Fargo (WFC)
Buffett added, ever so slightly, to his Wells Fargo position, buying over 9 million shares. It remains his largest holding and has been a core position for decades.
Buffett’s buy comes as Wells Fargo has been a laggard of late. However, it’s now offering a 3.25% dividend yield and its business will strengthen with rising interest rates and improved credit quality.
Its dominant position gives it quite the advantage. However, there are growth opportunities, with Wells Fargo looking into smaller branches that are half the size and cost.
He has been upping his Deere stake nicely. He bought up almost 6 million shares last quarter, increasing his stake by 34%. Buffett has been a Deere owner since 2012.
Deere is now offering a dividend yield above 3%. It’s a big bet on the fact that the world will continue to eat, plus the idea that protein consumption will rise in emerging markets.
This would spur the demand for Deere’s agriculture equipment, where Deere generates over 80% of its sales. It’s also becoming more of a bet on growth markets like Brazil, Russia, India, and China.
Liberty Global (LBTYA)
Buffett added 600,000 shares to its Liberty Global position; this comes as shares of the media conglomerate are down 30% for the last twelve months.
Despite the weakness, the company is still a diversified play on international cable.
The company, ran by dealmaker John Malone, has been buying and selling assets to best position the company.
It formed a joint venture recently with Vodafone (VOD) for its Dutch assets. Already the largest cable operator in Europe, the goal is to expand its broadband customer base and footprint.
Axalta Coating Systems (AXTA)
This is one of Buffett’s mid-cap stock picks. He bought up roughly 125,000 shares last quarter and first bought into Axalta during the second quarter of 2015.
Axalta is a $6 billion market cap paints company for the transportation industry. It’s a bet that the car market will continue to grow.
Axalta operates in the high-margin auto refinish business, which is a key part of the auto repair market that can grow even with a weak economy.
But, more interesting is that Buffett could be using this as a way to play the Asian and Latin American markets, where Axalta is leveraged to the growing fleets of new cars.
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