May 16 (Bloomberg) -- Billionaire Warren Buffett's Berkshire Hathaway Inc. took advantage of falling share prices in the first quarter to boost stakes in Kraft Foods Inc. and Wells Fargo & Co.
Buffett also increased holdings in Ingersoll-Rand Co., the refrigeration-equipment maker, and health insurers UnitedHealth Group Inc. and WellPoint Inc., according to a regulatory filing yesterday by Omaha, Nebraska-based Berkshire. The Standard & Poor's 500 Index declined 9.9 percent in the first three months of the year.
``If a stock goes down 50 percent it doesn't bother me in the least,'' Buffett told reporters earlier this month after Berkshire's annual shareholder meeting in Omaha. ``If we're going to be buying things, we want to buy them on sale.''
Buffett, 77, built Berkshire from a textile manufacturer into a $200 billion holding company with a $72.6 billion stock portfolio by investing premiums from insurance units such as Geico Corp. and National Indemnity Co. Berkshire is the largest shareholder of Coca-Cola Co., Wells Fargo, Kraft and American Express Co. as of March 31, according to Bloomberg data.
Berkshire's holdings of Kraft, the world's second-biggest foodmaker, rose 4.4 percent since Dec. 31 to 138.3 million shares, according to the filing, which discloses U.S. equity investments as of March 31. Kraft shares fell 5 percent in the first quarter.
Kraft rose 58 cents, or 1.8 percent, to $32.51 at 4:01 p.m. in New York Stock Exchange composite trading. Ingersoll-Rand increased $1.11, or 2.5 percent, to $45.85. UnitedHealth climbed 62 cents, or 2 percent, to $32.32, while WellPoint gained $1.64, or 3.3 percent, to $51.53. Wells Fargo declined 65 cents, or 2.2 percent, to $28.95.
Wells Fargo
Berkshire's stake in San Francisco-based Wells Fargo, the second-biggest U.S. home lender, increased by 1.4 million shares to about 290.7 million. The bank averaged $29.74 on the New York Stock Exchange during the first quarter, about 9 percent lower than in the last three months of 2007, when Buffett increased Berkshire's ownership by 3.4 percent.
``He's putting more in the things he's invested in all along,'' said Frank Betz, a partner at Carret Zane Capital Management, which oversees $800 million including Berkshire shares in Warren, New Jersey. ``We'll see more of that; why reinvent the wheel?''
The filing reported no new companies in the portfolio, unlike the prior quarter, when Berkshire disclosed having built a stake of more than $4 billion in Kraft, or last year, when the company revealed it became the largest shareholder in railroad Burlington Northern Santa Fe Corp.
``His energies are totally focused on acquisitions and the debt markets right now,'' said Mohnish Pabrai, founder of Irvine, California-based Pabrai Investment Funds, who manages $600 million and holds Berkshire shares. ``There's a lot of opportunity on the debt side because of liquidity drying up.''
``Extreme Dislocations''
Berkshire has spent $4 billion in the municipal auction-rate bond market, taking advantage of payouts that topped 10 percent after regular bidders fled, Buffett said at the annual meeting. Markets were so disrupted, he said, that bonds from the same issue were selling simultaneously from the same broker with yields of 6 percent and 11 percent.
``Those are extreme dislocations,'' Buffett said during a question-and-answer session with shareholders on May 3. ``Those are great times to make unusual amounts of money.''
Buffett will be in Europe next week meeting with owners of large family-run businesses as he looks to put $35 billion of cash to work.
UnitedHealth, WellPoint
Berkshire added to its stakes in the two largest U.S. health insurers in the first quarter as the shares fell. Holdings in Minnetonka, Minnesota-based UnitedHealth and in Indianapolis- based WellPoint increased by 6.7 percent each. WellPoint lost half its market value in the quarter while UnitedHealth tumbled 41 percent.
Buffett, the world's richest man according to Forbes magazine, is often mimicked by investors who follow his stock picks. Using that strategy for 31 years would have delivered annual returns of about 25 percent, double the return of the S&P 500, according to an academic study in 2007.
Berkshire disclosed a 47 percent increase in shares in Hamilton, Bermuda-based Ingersoll-Rand. Buffett's company had 936,600 shares as of March 31.
Buffett reported no holdings in Minneapolis-based Ameriprise Financial Inc. compared with more than 600,000 shares on Dec. 31. Berkshire had the stake from when the investment adviser was spun off from American Express in 2005.
Iron Mountain, Ameriprise
Berkshire cut its holdings of Iron Mountain Inc., the records-storage company, by 28 percent to 3.37 million shares.
Ameriprise fell 82 cents, or 1.6 percent, to $49.83. Iron Mountain fell 16 cents to $29.76.
Investors can't be certain they have a complete picture of Berkshire's holdings because Buffett regularly asks the U.S. Securities and Exchange Commission for permission to delay disclosure of holdings to avoid copycat investing. Yesterday's filing only lists equities traded on U.S. exchanges. Buffett discloses other investments in filings with non-U.S. regulators.
Berkshire has declined 14 percent this year in New York trading after posting two straight declines in quarterly profit on lower returns from insurance businesses. Berkshire shares rose $890 to $122,400 today.
Berkshire subsidiaries include See's Candies, Helzberg Diamonds, business jet fleet operator NetJets Inc. and carpet maker Shaw Industries. Berkshire earned $13.2 billion in 2007.
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