Berkshire Hathaway Inc. cut stakes in Johnson & Johnson, the world’s largest maker of health-care products, and Procter & Gamble Co., the No. 1 consumer products company, as Chairman Warren Buffett raised cash for the biggest acquisition of his career.
Buffett’s company decreased its stake in Johnson & Johnson by about 26 percent to 27.1 million shares in the three months ended Dec. 31, Omaha, Nebraska-based Berkshire said today in a regulatory filing listing U.S. equity investments at the end of 2009. The holding of Cincinnati-based Procter & Gamble fell about 9 percent to 87.5 million.
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Buffett raised cash for Berkshire’s $27 billion buyout of railroad Burlington Northern Santa Fe Corp., which was completed last week. The firm issued equity and sold $8 billion of debt in support of the deal. In 2008, Berkshire sold shares of New Brunswick, New Jersey-based Johnson & Johnson to help finance $8 billion of investments in Goldman Sachs Group Inc. and General Electric Co.
“It is basically raising extra liquidity for Burlington Northern,” said Glenn Tongue, a partner at T2 Partners LLC, which owns Berkshire shares. Buffett “always said he was willing to sell stocks to buy whole businesses.”
Investment decisions by Buffett, the second-richest American, are watched by mutual funds and individuals looking for clues about his strategy. Berkshire, which Buffett has led as chief executive officer for four decades, benefited last year as the biggest equity market increase since 2003 lifted a portfolio that included the largest stockholdings in Coca-Cola Co., American Express Co. and Wells Fargo & Co.
Berkshire also disclosed reduced stakes in Exxon Mobil Corp., SunTrust Banks Inc., Ingersoll-Rand Plc, Gannett Co., UnitedHealth Group Inc., CarMax Inc. and WellPoint Inc.
Buffett built Berkshire into a $180 billion company through takeovers and the purchase of stock in companies he believes have lasting competitive advantages and superior management. He built a stake of more than 20 percent in Burlington Northern over two years before announcing a buyout of the railroad in November. Berkshire completed the deal on Feb. 12.
Buffett bet on the stocks of some of the world’s biggest companies last year. In the third quarter, Berkshire took stakes in Exxon and Nestle SA, the No. 1 producers of oil and food. The firm also raised its stake in Wal-Mart Stores Inc., the largest retailer. Berkshire is the owner of car insurer Geico, apparel maker Fruit of the Loom and power producer MidAmerican.
Berkshire today disclosed an increased stake in Wells Fargo, the biggest bank on the U.S. West Coast, Wal-Mart, Becton Dickinson and Co. and Republic Services Inc. Buffett’s company listed about 320 million shares of Wells Fargo compared with 313.4 million on Sept. 30.
The filing omits information about some transactions because Buffett is permitted to keep them confidential for now. The U.S. Securities and Exchange Commission sometimes allows companies to withhold data from the public to limit copycat investing while a firm is building or cutting a position.
