Berkshire Hathaway Inc. reported a stake in Charter Communications Inc. and trimmed its holding in DirecTV as Chairman Warren Buffett’s deputy investment managers reallocated their bets on pay-TV companies.
Berkshire held about 2.3 million Charter shares on June 30, Buffett’s Omaha, Nebraska-based company said in a filing to the U.S. Securities and Exchange Commission. The investment was valued at about $361 million based on yesterday’s closing price in New York. The stake in DirecTV fell 32 percent in the quarter to 23.5 million shares and was valued at about $2 billion.
Buffett, 83, hired Todd Combs and Ted Weschler in 2010 and 2011 as part of his succession plan. The stock pickers help manage Berkshire’s $119.2 billion equity portfolio and will jointly oversee all investments once Buffett’s no longer leading the business. The deputies make smaller stock bets than their boss and are responsible for the DirecTV stake.
“From a Berkshire shareholder point of view, it’s a good thing” that Combs and Weschler are diversifying the portfolio, said Jeff Matthews, an author of books about Buffett. “It shows he’s got good capital allocators on the bench.”
DirecTV rallied 11 percent in the second quarter as AT&T Inc. announced a deal in May to buy the company for more than $48 billion to gain video subscribers in the U.S. and Latin America. Weschler and Combs put out a statement that month supporting the deal. Yesterday’s filing doesn’t say whether Berkshire cut its stake before or after the agreement, and Buffett didn’t return a message seeking comment on the timing.
‘Ton of Dough’
“They did a great job with DirecTV,” said Matthews, who is also a Berkshire investor. “They made a ton of dough.”
Charter, the fourth-largest U.S. cable company, is bulking up as its largest shareholder, billionaire John Malone’s Liberty Media Corp., bets that the industry is in the best position to satisfy growing consumer demand for Internet at faster speeds.
After being outbid by Comcast Corp. for control of Time Warner Cable Inc., Charter agreed in April to take control of 3.9 million cable-TV customers from its two larger rivals to help them get regulatory approval for their merger. Stamford, Connecticut-based Charter remains a “logical acquirer” of cable assets, Liberty Media Chief Executive Officer Greg Maffei said this month in a Bloomberg Television interview.
Berkshire also said in the filing that it increased its investment in Verizon Communications Inc. by 36 percent in the quarter to 15 million shares. The holding was valued at about $735 million.
The bets on Charter and New York-based Verizon probably reflect a view of “telecom and cable as mature industries,” Jan Dawson, an analyst with Jackdaw Research in Provo, Utah, said in a phone interview. They’re “blue-chip companies, probably more stable with relatively less risk.”
The filing showed that Berkshire cut holdings of Phillips 66 and ConocoPhillips while increasing stakes in Suncor Energy Inc., International Business Machines Corp., Wal-Mart Stores Inc. and General Motors Co.
A holding in Chicago Bridge & Iron Co. climbed 12 percent to 10.7 million shares and would be valued at about $621 million at yesterday’s closing price. The engineering and construction company slid 22 percent during the quarter.
Berkshire Class A shares climbed past $200,000 yesterday for the first time. The billionaire has shunned share splits, making the stock price an advertisement for how his long-term, patient approach to investing has built wealth.
Berkshire’s success has earned Buffett a following among investors who study the company’s portfolio for clues about his strategy. Major stock purchases can boost shares of target companies, as happened last year when Buffett disclosed a $3.7 billion stake in Exxon Mobil Corp.
Charter climbed 1.6 percent to $158.98 in extended trading at 4:51 p.m. yesterday in New York.