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.
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.
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