How Berkshire Hathaway’s Combs and Weschler Performed in 2014


By Dr. David Kass PhD, Harvard University

After outperforming the S&P 500 and Warren Buffett in both 2012 and 2013, Todd Combs and Ted Weschler, appear to have underperformed  the S&P 500 in 2014.

Combs and Weschler are each managing about $7.5 billion of the $120 billion equity portfolio of Berkshire Hathaway.  Their largest investments, DirecTV (DTV) and DaVita (DVA), performed very well, with each outperforming the S&P 500 by about 10 percentage points.  DTV (Combs and Weschler) and DVA  (Weschler) are each currently valued at more than $2.5 billion.

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However, their investments in General Motors ($1.3 billion) (Weschler) is down 20% this year, and Chicago Bridge & Iron ($500 million) (Combs) has lost about 50% of its value.  By contrast, the S&P 500 has risen over 10% in 2014.  Other declines in the Combs and Weschler portfolios include National Oilwell Varco (NOV), Suncor Energy (SU), Viacom (VIAB), and Liberty Media (LMCA).  However, the following Combs/Weschler investments rose in 2014: Charter Communications (CHTR), Liberty Global (LBTYA), Mastercard (MA), Visa (V), Precision Castparts (PCP), and Wabco (WBC).

Warren Buffett’s largest equity investment, Wells Fargo (WFC), rose about 25% in 2014 and is currently valued at about $27 billion.  His next three largest investments are Coca-Cola (KO) ($17 billion) (+5%), American Express ($14 billion) (+8%), and IBM (IBM) ($11 billion) (- 13%).

I am quoted in a Bloomberg article on this topic:

“It appears, on first glance, that Todd and Ted have underperformed the S&P 500 this year,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business who has studied Berkshire’s portfolio.

The entire article is available at:

http://www.bloomberg.com/news/2014-12-18/buffett-s-backup-stock-pickers-stumble-as-gm-declines.html?cmpid=yhoo