Buffett’s firm owned about 6.5 million shares of the energy construction and engineering company on March 31, Omaha, Nebraska-based Berkshire said today in a regulatory filing listing its U.S. stock portfolio. Berkshire exited stakes in General Dynamics Corp. (GD) and Archer-Daniels-Midland Co. (ADM), according to the filing.
Buffett’s deputies, Ted Weschler and Todd Combs, have been adding holdings as they get more funds to invest. The managers earn bonuses if their portfolios beat the Standard & Poor’s 500 Index. That contrasts with the way Buffett, 82, manages Berkshire’s money, keeping at least $20 billion in cash partly to cover potential claims from insurance units.
Combs and Weschler have an incentive “to put that money to work” if they think there are opportunities to outperform the market, said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business, who has taken students to meet the billionaire in Omaha. “Buffett wants his $20 billion rainy-day fund.”
The CB&I stake was valued at more than $400 million at the end of the first quarter, when The Hague-based company traded for $62.10 a share. The stock rose 99 cents to $58.75 in extended trading at 4:15 p.m. in New York.
As chairman and chief executive officer for more than four decades, Buffett built Berkshire through acquisitions that transformed the textile maker into a business that provides insurance, hauls freight, manufactures chemicals and sells products from underwear to diamonds. He also amassed the largest equity stakes in companies including Wells Fargo & Co. (WFC), American Express Co. (AXP) and Coca-Cola Co.
Buffett’s track record has made him a cult figure for investors. Berkshire’s quarterly filings of its U.S. stock holdings are studied by mutual funds and individuals looking for clues about the company’s investment strategy. The filing doesn’t say who is responsible for each pick.
Berkshire has said that oversight of the $129 billion stock-and-bond portfolio will fall to Combs and Weschler once Buffett is no longer running the company. For now, he makes the larger equity investments, while Combs, 42, and Weschler, 51, are responsible for smaller bets.
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