Buffett's Berkshire Boosts Kraft, Wells Fargo Stakes
By Josh P. Hamilton and Erik Holm


May 15 (Bloomberg) -- Billionaire Warren Buffett's Berkshire Hathaway Inc. added to stakes in Kraft Foods Inc. and Wells Fargo & Co. in the first quarter, taking advantage of prices driven down by the credit crisis and slowing U.S. economy.

Buffett also increased holdings in health insurers UnitedHealth Group Inc. and WellPoint Inc., according to a regulatory filing today by Omaha, Nebraska-based Berkshire. The Standard & Poor's 500 Index declined 9.9 percent in the first three months of the year.

``If a stock goes down 50 percent it doesn't bother me in the least,'' Buffett told reporters earlier this month after Berkshire's annual shareholder meeting in Omaha. ``If we're going to be buying things, we want to buy them on sale.''

Buffett, 77, built Berkshire from a failing maker of men's suit linings into a $200 billion holding company with a $72.6 billion stock portfolio by investing premiums from insurance subsidiaries such as Geico Corp. and National Indemnity Co. Berkshire is the largest shareholder of Coca-Cola Co., Wells Fargo, Kraft and American Express Co. as of March 31, according to Bloomberg data.

Berkshire's holdings of Kraft, the world's second-biggest foodmaker, rose 4.4 percent since Dec. 31 to 138.3 million shares. Buffett first disclosed a stake in the Northfield, Illinois-based company at the end of 2007. The shares fell 5 percent in the first quarter. Berkshire's filing discloses U.S. equity investments as of March 31

Wells Fargo

Berkshire's stake in San Francisco-based Wells Fargo, the second-biggest U.S. home lender, increased by 1.4 million shares to about 290.7 million. The bank averaged $29.74 on the New York Stock Exchange during the first quarter, about 9 percent lower than in the fourth, when Buffett increased Berkshire's holdings by 3.4 percent.

``He's putting more in the things he's invested in all along,'' said Frank Betz, a partner at Carret Zane Capital Management, which oversees $800 million including Berkshire shares in Warren, New Jersey. ``We'll see more of that; why reinvent the wheel?''

Berkshire added to its stakes in the two largest U.S. health insurers as the shares fell. Holdings in Minnetonka, Minnesota- based UnitedHealth and in Indianapolis-based WellPoint increased by 6.7 percent each. WellPoint lost half its value in the quarter while UnitedHealth tumbled 41 percent.

Buffett, the world's richest man according to Forbes magazine, is often mimicked by investors who follow his stock picks. Using that strategy for 31 years could have delivered annual returns of about 25 percent, double the return of the S&P 500, according to an academic study in 2007.

Ingersoll-Rand

Berkshire disclosed a 47 percent increase in shares in Ingersoll-Rand Co., the refrigeration-equipment maker based in Hamilton, Bermuda. The company now holds 936,600 shares.

Buffett reported no holdings in Minneapolis-based Ameriprise Financial Inc. compared with more than 600,000 shares on Dec. 31. Berkshire had the shares from when the investment adviser was spun off from American Express in 2005.

Berkshire cut its holdings of Iron Mountain Inc., the records-storage company, by 28 percent to 3.37 million shares.

Investors can't be certain they have a complete picture of Berkshire's holdings because Buffett regularly asks the Securities and Exchange Commission for permission to delay disclosure of holdings to avoid copycat investing. Today's filing only lists equities traded on U.S. exchanges. Buffett discloses other holdings in filings with non-U.S. regulators.

Kraft Foods

In Berkshire's prior quarterly filing of holdings, Buffett revealed a previously undisclosed stake in Kraft.

Berkshire has declined 14 percent this year in New York trading after posting two straight declines in quarterly profit on lower returns from insurance businesses.

Berkshire subsidiaries include See's Candies, Helzberg Diamonds, business jet fleet operator NetJets Inc. and carpet maker Shaw Industries. Berkshire earned $13.2 billion in 2007.

``Nine times out of ten, where he's going is where you want to be,'' said Betz. ``He's demonstrated for 50 years that he's right a whole lot more than he's wrong.''