Berkshire Hathaway Inc. Reveals Some Major Changes to Its Portfolio

In this segment from Market Foolery, the team reviews the latest portfolio updates from Berkshire Hathaway(NYSE: BRK-A) (NYSE: BRK-B)and its legendary CEO, Warren Buffett. The company sold off its position in a major retailer while picking up stakes in the airline industry and more. So what does Buffett see, and how should retail investors react?

A full transcript follows the video.

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This video was recorded on Feb. 15, 2017.

Mac Greer: Let's begin with Warren Buffett. On Tuesday,Berkshire Hathawayreporting its latest portfolio news. Jason, some reallyinteresting moves here. Berkshire really loading up on shares ofApple andunloading most of itsWal-Martpositions. They'realso adding new stakes inMonsanto,Sirius XM, andSouthwest Airlines.

Jason Moser:Yeah,a lot of fascinating moves there. We talk a lot aboutwatching the investors that we respectand the moves that they make. Wenever advocated just going andblindly following, but I think it's always interesting to seedifferent perspectives on things. Personally, what reallystood out to me was the dumping of the Wal-Mart shares. We've talkeda lot about this before, how general retail is beingdisrupted.Amazonis reallythe company out there doing it. It'sinteresting, what the market is telling us is basically all you need to know. Youlook at Wal-Mart today, the market values it, it'ssomewhere in the neighborhood of $200 billion, and it's bringing in over $400 billion in sales every year. Well, Amazon brings in maybe a quarter of the total sales that Wal-Mart brings in, yet Amazon's market cap is double that of Wal-Mart. So, it's clear to see that the market, being that it's forward-looking, islooking into the future and thinking,this is the direction that things are going.Amazon is really the one leading the way. Wal-Mart got caughtasleep at the wheel. AndI think that now Wal-Mart is paying the price.

David Kretzmann:I wonder if Berkshire, in the next three years, adds Amazon to itsportfolio. They're warming up to tech with Apple.Maybe Amazon is next. To me, what really stuck out is, a couple weeks ago, Buffett, in aninterview, he mentioned that since the election,Berkshire has invested about $12 billion, which is roughly 8% of that $150 billion or so portfolio that they have investing in public stocks. That'sa lot to be investing as the market is hitting new highs. Obviously, we tend to think of Buffett andBerkshire as value investors. On the surface, youwouldn't expect those kind of investors to be investing quite a bit as the market is hitting new highs. So,I think that says a lot.

They also unloaded their stake inDeereandVerizon, andKinder Morganwas another that we follow at the Fool. So,interesting to see Berkshire dumping Kinder Morgan afterless than a year of holding it -- Kinder Morgan is aninfrastructure company, a natural gas and oil pipeline -- then,to be loading up on airlines, whichtend to benefit from lower energy prices. So, maybe they'reseeing something or expecting something withenergy prices to remain low, which would benefit airlines and could hurt someenergy infrastructure companies like Kinder Morgan.

Greer:So,if I am an investor and I'm consideringsome of these stocks, to what extentshould I try to mimic what Buffett andBerkshire are doing? Because obviously, he's had an incredible track record. Should I mimic some of these moves? Oris he playing a different game?

Kretzmann:I don't think you ever want to blindly follow any investor. I think what you want to mimic is the processand the strategy. Obviously, we do that at the Fool withDavid and Tom Gardner, they're great investors here.Peter Lynch, Warren Buffett. If you're justblindly following any investor, you'renot really going to learn a whole lot as an investor. Youreally want to understand the thought process that goes behind those decisions. I think that's what's key to be asuccessful investor.

Moser:Yeah,I think a very good example of that --because I think David is spot on there -- if welook at a business likeMarkel, which we talk about often here, and we refer to it as a baby Berkshire in many ways,because the business is set up very much inthe same way. It's an insurance business that owns aportfolio of stocks, and now holding businesses as well.Tom Gayner, the co-CEO, generally, he's known for the investing success there at the company. If you look at the holdings in Markel's portfolio, they own Apple. They also own Amazon. They don't own Wal-Mart. They ownFacebook.

So,there's a business where they do a lot of things thatBerkshire does as well, buteven they aren't mimicking those moves,despite the fact that Gayner and company are professedBerkshire fans, they have a wonderful brunch they're out there theday after the Berkshire Hathaway meeting. There's a lot of similaritiesin the business there. It's very small comparatively speaking, but you can see there as an example in Markel'sportfolio. Sure, they follow some of Buffett's leads there, but they also do their own thinking andcome to their own conclusions. We encourage investors out there to do the same.

Mac Greer owns shares of Apple.David Kretzmann owns shares of Amazon, Berkshire Hathaway (B shares), Facebook, Kinder Morgan, and Sirius XM Radio. Jason Moser owns shares of Apple, Berkshire Hathaway (B shares), and Markel. The Motley Fool owns shares of and recommends Amazon, Apple, Berkshire Hathaway (B shares), Facebook, Kinder Morgan, and Markel. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.