Going Through Warren Buffett’s Stock Portfolio

By Jae Jun on August 18, 2009 | More Posts By Jae Jun | Author's Website

http://www.oldschoolvalue.com

With Berkshire Hathaway disclosing their holdings in their latest 2nd quarter 13-F, I thought it would be interesting to go through each position that is held and calculate the stock value in hopes of gaining some ideas.Going through portfolios of respected investors is another way of generating ideas. Davy Bui of The Enlightened American does a fine job of tracking and displaying hedge fund holdings of respected investors in an easy to read format.

There are 41 positions in the portfolio of Warren Buffett and Berkshire so I’ll be breaking it up over numerous posts.Old School Value’s Circle of Competence
Although I’ll try to put a value on each company, except financials, there are industries that are outside of my circle of competence which I may calculate incorrectly. E.g. I don’t know much about pharmaceuticals and commodities and how to look at these businesses as a future going concern which will make it difficult to apply a growth rate that I would be comfortable with compared to others.

Warren Buffett Stock Picks
Going through the first 10 Stock Ideas
* American Express (AXP) - outside circle of competence
* Bank of America (BAC) - outside circle of competence
* Becton Dickinson & Co (BDX) - Latest addition to the portfolio
* Burlington Northern Santa Fe (BNI)
* CarMax (KMX)
* Coca Cola (KO)
* Comcast Corp (CMCSA)
* Comdisco Holding (CDCO)
* ConocoPhilips (COP)
* Costco (COST) - analysis

(Current stock prices vary due to timing of writing)

Becton Dickinson & Co (BDX: 65.65 -0.65 -0.98%) Stock Value
Becton, Dickinson and Company (BDX) is a medical technology company that operates through three business segments: BD Medical, BD Diagnostics, and BD Biosciences.

BDX Spider Graph













(The above graph is from an analysis of BDX which will be posted as a guest article on another blog which I’ll link to later.)
* Gross, operating and net margins steadily increasing even in recessionary environment
* FCF positive for more than 10 years
* Inventory turnover consistent but margins have increased. Leads to higher efficiency and profit.
* ROA and ROE increasing steadily
* Reduced debt
* Has plenty of FCF to pay down debt rather than issue stock or seek loans
* CROIC is very steady at 17%. Company makes 17c off every $1 of cash invested
* FCF/sales = 12%. Converts 12c of every dollar in sales to FCF.

Intrinsic Value Estimates
DCF Stock Value: $87
Graham Stock Value: $110
Competitor and Peer Comparison: $76