Berkshire Cuts Johnson & Johnson Stake

Aug. 14 (Bloomberg) -- Dominic Chu reports on what Berkshire Hathaway reported in their 13-F filing. He speaks on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Berkshire Hathaway Inc. (BRK/A) added a stake in National Oilwell Varco Inc. (NOV) in the second quarter as billionaire Chairman Warren Buffett pared investments in consumer-products stocks including Procter & Gamble Co. (PG)

Buffett’s firm held 2.84 million shares of the oilfield- equipment maker as of June 30, his Omaha, Nebraska-based company said yesterday in a filing disclosing its U.S. stock portfolio. Berkshire’s P&G holding declined 19 percent to 59.6 million shares in the period. National Oilwell rose in New York trading.

Buffett, 81, built Berkshire over more than four decades into a firm valued at about $210 billion through acquisitions and by amassing the largest equity stakes in companies including Coca-Cola Co. (KO), American Express Co. and Wells Fargo & Co. (WFC) He’s been preparing for his eventual departure by handing more investment responsibilities to Ted Weschler, 51, and Todd Combs, 41, former hedge-fund managers hired in the past two years.

“Shareholders should welcome that,” Jeff Matthews, a Berkshire investor and author of “Secrets in Plain Sight: Business & Investing Secrets of Warren Buffett,” said in a telephone interview. “Better to find out now if they’re up to the task.”

Buffett has said he makes larger investments while the deputies are responsible for smaller bets, such as a stake in General Motors Co. disclosed in May. Weschler and Combs will oversee about $4 billion each, compared with $2.75 billion at the beginning of the year, the billionaire told Betty Liu last month in an interview on Bloomberg Television.

National Oilwell

The National Oilwell holding was valued at about $183 million at the end of the second quarter. The company advanced 1.4 percent to $77.30 at 11:01 a.m.

“We are very pleased to have Berkshire Hathaway as one of our shareholders,” Katina Hargett, a spokeswoman for Houston- based National Oilwell, said in an e-mail. “We will continue to strive to be a leader in our industry.”

Buffett’s firm reported ownership of 27.2 million shares of Phillips 66 (PSX), the refining company that began trading in May after it was spun off from ConocoPhillips. Weschler or Combs made additional purchases of the refiner beyond what Berkshire received for its existing stake in ConocoPhillips, the billionaire told Liu. The investment was valued at about $900 million on June 30. Phillips 66 was little changed in New York trading.

P&G has had difficulty raising prices for some products as consumers consider less-expensive alternatives, Buffett told CNBC in May. His company’s stake in the maker of Tide laundry detergent and Gillette razors was valued at about $3.65 billion at the end of June.

CEO’s Plan

Robert McDonald, P&G’s chief executive officer, is working to prove that his pricing and plan to cut cost cuts will be enough to improve results. Jennifer Chelune, a spokeswoman for the Cincinnati-based company, declined to comment.

Berkshire pared its holdings of Johnson & Johnson (JNJ) by about two-thirds to 10.3 million shares. The world’s biggest health- products maker was ordered in April to pay more than $1.1 billion in fines after an Arkansas jury found the firm misled doctors and patients about the risks of antipsychotic medication Risperdal. The company has also struggled with recalls of artificial hip implants and over-the-counter medicines.

“It’s still got a lot of wonderful products and it’s got a wonderful balance sheet and all of that, but there have been too many mistakes,” Buffett told CNBC in a Feb. 27 interview.

Bill Price, a spokesman for the New Brunswick, New Jersey- based company, declined to comment.

Kraft Foods

Berkshire’s holding of Kraft Foods Inc. (KFT) fell 25 percent to 58.8 million shares. The foodmaker is planning to split its snacks business from its U.S. grocery unit on Oct. 1. Buffett has pared the investment for five straight quarters and said in 2010 that Kraft’s takeover of Cadbury Plc and the sale of its pizza brands were “dumb” moves.

Michael Mitchell, a spokesman for the Northfield, Illinois- based company, declined to comment. Kraft slipped 0.3 percent while P&G and Johnson & Johnson were little changed.

“Warren has always said, as he talked about other positions he’s sold, that the best discipline for selling is if you have something better to do with the money,” Tom Russo, a partner at Berkshire investor Gardner Russo & Gardner, said in a phone interview before the filing was released.

Berkshire increased its investment in Wells Fargo, the largest U.S. home lender, to 411 million shares as of June 30 from 394.3 million three months earlier. The stake was valued at more than $13 billion at the end of the second quarter.

‘Sensational’ Operation

Buffett has praised the San Francisco-based bank’s mortgage business and said it will benefit as the housing market rebounds. The lender created one of every three U.S. mortgages in the first half, according to Inside Mortgage Finance, and may seek to boost market share to 40 percent.

“They’ve got a sensational mortgage operation,” Buffett told Liu. “The total mortgage market was at the $3 trillion level not that long ago. If it goes back up to $3 trillion, I hope Wells is doing a third of those.”

Berkshire’s stake in Bank of New York Mellon Corp., the world’s largest custody bank, more than tripled to 18.7 million shares and was valued at about $410 million as of June 30.

To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net.

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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