Todd Combs, Warren Buffett’s apprentice stock picker at Berkshire Hathaway Inc., posted gains on his first equity bets at the company by buying when markets fell and increasing stakes in investments that declined.
Purchases of seven stocks by Mr. Combs in the nine months ended Sept. 30 advanced almost 14 percent as of Dec. 31, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index was little changed last year. Mr. Combs’s results were propelled by a 51% surge in holdings of MasterCard Inc., the world’s second-biggest payments network, and a 28% advance in an investment in retailer Dollar General Corp.
Mr. Combs followed the example set by Mr. Buffett, who invested in Goldman Sachs Group Inc. at the depths of the 2008 credit crunch and advised shareholders in 1998 to “rejoice when markets decline.” The portfolio manager hired by Mr. Buffett in 2010 added shares of Intel Corp., CVS Caremark Corp. and Dollar General on Aug. 8 last year as the S&P 500 had its biggest decline of 2011.
Khrom Capital was up 32.5% gross and 24.5% net for the first quarter, outperforming the Russell 2000's 21.2% gain and the S&P 500's 6.2% increase. The fund has an annualized return of 21.6% gross and 16.5% net since inception. The total gross return since inception is 1,194%. Q1 2021 hedge fund letters, conferences and more Read More
“Those are very Buffett-like tenets of value investing: Buy when the markets are fearful,” said Tom Lewandowski, an analyst with Edward Jones & Co. who has a “buy” rating on Berkshire. “So I’m not surprised to see that Todd was buying.” Aug. 8 was the first trading day after S&P downgraded the U.S.
Mr. Buffett, 81, has said he’ll focus on managing Berkshire’s largest stockholdings and count on Mr. Combs and Ted Weschler, who was hired to join the Omaha, Nebraska-based firm this year, to take stakes of about US$200-million.
Ms. Combs spent about US$1.24-billion accumulating positions in seven companies in first three quarters of 2011, according to the data from filings distributed by the National Association of Insurance Commissioners. The holdings of CVS, Intel, Dollar General, MasterCard, Visa Inc., General Dynamics Corp. and DirecTV were valued at about US$1.41-billion at year-end.
“I’d give him an excellent grade,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business. “He is very much demonstrating what you might expect a value investor like Warren Buffett to do.”
MasterCard was acquired by Mr. Combs at an average cost of about US$246.74 in January and April, according to data compiled by Bloomberg. MasterCard, based in Purchase, New York, surged to US$372.82 by year-end.
An initial stake in Dollar General was acquired through June 27 at an average price of US$33.39. Mr. Combs bought a second batch of shares through Aug. 8 at US$31.29, and a third through Aug. 29 at US$31.69. He paid an average of US$32.07 for about 4.5 million shares. Dollar General ended the year at US$41.14.
Mr. Combs bought about 3.5 million shares of CVS, the largest U.S. provider of prescription drugs, through Aug. 8 at a cost of about US$36.15 a share, the data show. He added 2.2 million shares less than a month later at an average of US$34.05. The stock ended the year at US$40.78 in New York trading.
|ValueWalk Premium Subscription Includes: