Berkshire Among Biggest DirecTV Winners on Deputies' Bets

Wednesday, 14 May 2014 11:10 AM

 

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Warren Buffett’s Berkshire Hathaway Inc. is one of the biggest beneficiaries of DirecTV’s rally, thanks to a stake built by his deputy stock pickers, Todd Combs and Ted Weschler, at about half the current price.

Berkshire had about 36.5 million shares in the satellite-TV provider as of Dec. 31, a filing shows. DirecTV has gained 25 percent this year to $86.08. AT&T Inc. is in advanced talks to buy DirecTV for about $50 billion, according to people familiar with the matter. Berkshire’s cumulative gain on the holding is more than $1 billion.

Buffett, 83, hired Combs in 2010 and Weschler in 2011 and has said the former hedge-fund managers will oversee investments when he’s no longer running Berkshire. Each currently manages about $7 billion, a sum that has grown as Buffett hands them more funds to manage and their portfolios appreciate.

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“They will be more and more important factors as the years go by,” Buffett said this month at his annual shareholders meeting in Omaha, Nebraska, where Berkshire is based.

DirecTV is the first stock picked by someone other than Buffett to make the list of Berkshire’s top holdings in the company’s annual report. Buffett said in the 2012 report that Combs, 43, and Weschler, 52, each held investments in the El Segundo, California-based company in their portfolios.

The most recent annual report shows 22.2 million shares accumulated at a cost of $1.02 billion, or less than $46 apiece. The sum excludes holdings at Berkshire’s employee pension funds.

Pension Funds

The total of 36.5 million DirecTV shares are valued at about $3.2 billion after the company slipped 1.2 percent Tuesday. The investment is worth more than stakes Buffett has in companies such as Goldman Sachs Group Inc. and Moody’s Corp. Weschler also oversees more than $2 billion in shares of dialysis provider DaVita HealthCare Partners Inc., while Combs has bet on companies such as MasterCard Inc.

Buffett, who is Berkshire’s chairman and chief executive officer, has asked the deputy stock pickers to invest pension- plan funds from some of Berkshire’s operating businesses. The strategy can save fees Berkshire would pay to outside asset managers and could reduce the need for contributions to pensions.

As of Dec. 31, DirecTV shares were part of assets for plans at Berkshire subsidiaries including Acme Brick Co.; underwear maker Fruit of the Loom; and the Buffalo News, a newspaper in New York State.

Buffett’s company said in a 2011 filing with the U.S. Securities and Exchange Commission that it accumulated about 4.2 million shares of DirecTV as of Sept. 30 of that year. The holding climbed to 34 million shares by the end of 2012. The highest price in those two years was $55.17, and the average was less than $48. Buffett didn’t immediately return a message seeking comment left with an assistant.

Mutual Funds

Berkshire has stock investments valued at more than $100 billion, including the largest holdings in Wells Fargo & Co. and American Express Co. Buffett’s company is scheduled to disclose later this week its list of holdings as of March 31.

Capital Group Cos., manager of the American Funds mutual funds, has the largest DirecTV stake, at about 7.6 percent, according to data compiled by Bloomberg. That compares with 7.3 percent for Berkshire and 5.6 percent for BlackRock Inc.

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