Summary 13F 2003

Two New 13Fs were filed on Feb 13, 2003. One was the first report for the quarter ending 12/31/2002. The other was an amended filing for 12/31/2001 that shows we still had 4,850,000 shares of First Data on that date; that has remained confidential until now.

Almost all of the activity appears in positions that are under $300 million which indicates they are probably Lou Simpson.

It looks like Warren is spending most his time on acquisitions and the activity there dwarfs anything going on in the stock portfolio ($700 million – $1.4 billion in stock purchases versus $18 billion in acquisitions, loans, junk bonds, etc).

Berkshire has added a new wrinkle to make it even more difficult to follow what is going on in the stock portfolio. It used to be that you could guess at the size of the confidential filings by subtracting what had been reported on the 13Fs from the figure reported for the same period on the 10Q under "equity securities". But this does not work anymore. As you can see form the table below the figures reported on the 13Fs is running high. On 12/31/2001 there was an excess of about $373 million on the 13Fs. At first this did not make any sense to me, but a close look the last filing shows that they are including in the 13Fs positions from the pension plans for some of their new acquisitions, like Shaw Industries, Justin Boots, and Johns Manville. I am not sure that this explains the excess, but it is the only explanation that I have come up with so far.

So this means if we want to guess at the size of confidential list, we are going to have to add in a fudge factor of some thing like $400 million (and it could be getting bigger all the time). For instance, we can not yet estimate the fourth quarter because we will not have the 10K for a couple of weeks, but for the third quarter of 2002 there is still $295 million missing from the 13Fs. If we add $400 million to that, I would guess there is still something like $700 million still on the confidential list at the end of the 3rd quarter.

Four more 13Fs were filed yesterday. They showed a position for First Data Corporation at the end of each quarter of 2002. The filing was interesting because it showed both selling and buying of First Data during 2002. The stock is a long term holding that Berkshire has been liquidating gradually since the 4th quarter of 1999. Berkshire held 12.4 million shares at the end of 1998, but by March 31 of this year the position had been reduced to 4.8 million shares. The stock has been rising in price throughout the period from about $40 at the end of 1998 to a high of around $90 in April. Berkshire has been a seller throughout the rally (1.4 million shares in 1999, 2.4 million in 2000, 3.7 million in 2001, and another .9 million in the first two quarters of this year). In June stock split two for one, and then it tanked in the third and fourth quarter, getting to a post-split low of 24 in October.

The interesting part is that in the fourth quarter Berkshire was buying. By December 31 they had added 3.3 million shares. If Warren bought near the low and that would be my guess, then we already have a nice gain because the stock is now trading at $34. At $24 FDC would have been selling at 9 times this year's cash flow, or for about 12% return on pretax earnings.

Last year Berkshire was selling the stock at $40 (split adjusted), and this year they were buying it at $25, you figure.

Berkshire filled its first 13F for the second Quarter of 2003 and an amended filing for the first quarter. The amended filed produced a new name DST Systems; they had a very small position and the name does not appear on the 13F for the second quarter. Level # and Wiltel that had appeared on the first quarter are gone. There were also sales of Dunn and Bradstreet, GATX, Great Lakes Chemical, Sealed Air, and Zenith National.

There was a small purchase of Comdisco and 338,000 shares were added to the Wells Fargo position.

The most interesting thing about the filings for the first two quarters is what we do not know. The confidential portion of the filing has risen substantially in the last two quarters to something probably in excess of $2 billion. Part of this is Petro China H shares—a position that was in excess of $630 million but is not listed on the 13F that was filed. Also not listed was First Data Corp, a position that was almost $400 million on December 31, 2002.