Warren Buffett is arguably the best investor of our time, so it pays to watch Berkshire Hathaway's (BRK.A) (BRK.B) quarterly filings. It's there, after all, where the Oracle of Omaha reveals the stocks that he's buying and selling.
When Buffett announced back in September that Berkshire Hathaway would be spending some of its gargantuan cash balance to repurchase its own stock, heads turned. Buffett had never done that before. Bulls took it as a sign that Buffett saw ridiculous value in the stock of his own holding company. Bears took it as a sign that there was nothing else out there worth buying.
Well, it turns out that Buffett did do quite a bit of buying during the months of July, August, and September.
A Peek Inside Buffett's Bag of Goodies
Even before the filing came out, Buffett was on CNBC, revealing that he had taken a roughly $10 billion stake in IBM (IBM). It's easy to see the appeal of IBM. The company has been a consistent producer. It shrewdly expanded from hardware to higher-margin business services well before today's scrambling PC makers.
With this week's filing, we can now take a look at five of Berkshire's new investments.
1. Intel (INTC): IBM and Intel? The same Buffett that rightfully eschewed tech stocks during the dot-com bubble doesn't appear to be tech-shy these days. Intel is the world's leading market of microprocessors. "Intel Inside" is its old slogan, and now Intel is inside Berkshire Hathaway.
2. DIRECTV (DTV): Buying the country's leading satellite television company may be risky these days. Rivals Comcast (CMCSA) and DISH (DISH) have been shedding video subscribers lately. However, armed as the exclusive provider of the NFL Sunday Ticket, DIRECTV has been able to consistently grow its subscriber base at premium rates.
3. Visa (V): Buffett already owns a chunk of MasterCard (MA), so why not buy into the matching set? Visa and MasterCard are in a sweet spot as we become a cashless society. They are credit card marketers, collecting a steady stream of fees. They aren't subject to the credit risks behind their plastic, since it's the issuing banks that are on the hook for deadbeat swipers. In short, it's a financial services play without the financial services risk.
4. CVS Caremark (CVS): The company behind the leading CVS drugstore chain also is a major player in prescription benefits management through Caremark. It's a reasonable play on the aging -- and prescribing -- of America, backed by the all-weather allure of manning a drugstore.
5. General Dynamics (GD): As one of the top dogs among defense contractors, General Dynamics may seem like an odd choice for Buffett in these deficit-strapped times. However, General Dynamics has managed to consistently boost its dividends in all climates. The best defense is a strong payout offense.
What Would Buffett Do?
Knowing where Buffett is investing his capital isn't reason enough for investors to sell all of their stocks and only buy into these six companies. Warren wouldn't approve of that strategy. However, now may be a good time to commit some due diligence to seeing which of Buffett's new toys are worth playing with in your own portfolio.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article. The Motley Fool owns shares of Berkshire Hathaway, Intel, General Dynamics, International Business Machines, and MasterCard. The Fool owns shares of and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Intel and Berkshire Hathaway. Motley Fool newsletter services have recommended creating a bull call spread position in Intel.