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1. Buffett's Latest Portfolio Moves
2. Soros Takes Major Stake in AMD, Chipotle, and Cisco
3. Manufacturing Shows Unexpected Signs of Strength
4. Fed's Poole: Aging Population May Curb Economy
1. Buffett's Latest Portfolio Moves
Warren Buffett's Berkshire Hathaway made some adjustments to its investment
portfolio in the third quarter, reducing its stake in some and adding shares in
others, according to regulatory filings with the Securities and Exchange
Commission.
First, let's look at the cutbacks: Target, Anheuser-Busch, and H&R Block.
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Berkshire just disclosed its stake in Target at the end of October, buying 5.5
million shares or $268 million worth of the nation's second largest discount
retailer in the second quarter. But just as quickly, Berkshire sold off about
4.75 million shares, bringing its stake in Target to just 745,700 shares.
Target announced yesterday a 16 percent jump in third quarter profits to 59
cents per share, beating expectations. Analysts surveyed by Thomson Financial
were expecting earnings to come in at 55 cents a share.
Berkshire sold 7.11 million shares in Anheuser-Busch, the world's largest
brewer, after making an initial investment of 44.7 million shares or 5.7 percent
of the company last year. Berkshire's remaining investment was 36.4 million at
the end of September.
Berkshire cut its stake in tax preparer H&R Block, reducing shares to 10.97
million from 11.93 million.
Now, let's look at where the company added to its positions: Lowe's, Nike, and
Iron Mountain.
Berkshire made a significant increase in its stake in home-improvement retailer
Lowe's, boosting the amount of shares from 390,000 to 6.79 million. Lowe's and
Home Depot, Lowe's main competitor, have both cut their earnings outlook in the
face of the housing slump. Buffett owns 4.18 million of Home Depot stock, too.
Apparently, Buffett thinks now's the time to buy.
The company also hiked its stake in Nike, the world's biggest athletic-shoe
maker, from 2.47 million shares to 4 million shares. Berkshire added a million
shares of Iron Mountain, the largest seller of records-management services, to
its portfolio, raising its stake to 6 million shares.
Berkshire Hathaway also gained 10 million shares of Western Union as part of its
spinoff from First Data Corp. in September.
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2. Soros Takes Major Stake in AMD, Chipotle, and Cisco
Like Warren Buffett, billionaire investor George Soros disclosed his savvy
investment moves in SEC filings. Soros's hedge fund added to its equities
position by taking major stakes in a few companies.
Soros Fund Management LLC increased its equities investments by 38 percent in
the third quarter, investing nearly $2.9 billion, according to the filings.
Soros bought a $20 million stake in Advanced Micro Devices (AMD) and an $11
million position in Chipotle Mexican Grill, which recently spun off from parent
company McDonalds.
The fund also added to its position in Cisco Systems, bringing the investment to
$30 million worth of shares from $2.4 million worth in the second quarter, a
1,150 percent increase in the stake.
Soros also decided that some energy companies are a bargain right now, while
others are not. The Soros fund invested $42 million in Occidental Petroleum and
$31 million in Valero Energy. However, the fund sold $15 million worth of shares
in both Massey Energy Corp. and Pioneer Natural Resources.
Soros seemingly has mixed feelings about health-care companies too. His fund
picked up $12 million worth of shares in health benefits company WellPoint, and
sold $22 million worth of the iShares Nasdaq Biotech Index.
Soros also sold his entire $2.5 million stake in Yahoo, in favor of buying a $2
million stake in rival Google.
The hedge fund also invested $18 million in McData Corp's convertible debt.
The filings don't include short positions.
Editor's Note:
3. Manufacturing Shows Unexpected Signs of Strength
Manufacturing activity in New York state rose further in November with the
overall index increasing to a reading of 26.66 from an unrevised 22.92 in
October, surprising analysts.
The median expectation of 14 economists surveyed by Dow Jones Newswires was for
a falloff to a reading of 15.50.
The Bank said Wednesday in its Empire State Manufacturing Survey that
"conditions for New York manufacturers improved at an accelerated pace in
November."
The index only began to be compiled in July 2001, but has gained market
attention as a precursor of the Philadelphia Fed's manufacturing index (due to
be released at noon EST on Thursday), which is itself seen as a proxy for the
Institute for Supply Management's national manufacturing survey. If the Empire
State Survey were calculated on an ISM basis it would have a positive reading of
58.6 (compared with a reading of 56.8 in October).
Alan Ruskin, chief international strategist at RBS Greenwich Capital in
Greenwich, Conn., said the Empire State survey supported the view that the
slowing of the national economy is not accelerating.
That's important because of recent market fears that the national ISM index will
slip below 50 soon, which indicates contraction, Ruskin said in an e-mail note.
The November reading for the Empire State new orders index rose to a reading of
22.38 compared with 11.75 in October, while the shipments index increased to
26.63 from 22.54.
The unfilled orders index moved back into positive territory with a reading of
10.24 compared with a reading of negative 1.51 in October. Inventories,
meanwhile, moved further into positive territory with a reading of 3.77,
compared to 2.50 in October.
The prices paid index increased to a reading of 34.90 compared with 30.83 in
October, while the prices received index decreased to a reading of 16.98 from
17.50 in October, showing that manufacturers are still facing higher costs which
they are having trouble passing on in the form of higher prices.
The employment indexes were mixed. The number of employees rose to a reading of
24.50 from 19.39 in October, while the average employee workweek slipped to a
reading of 12.64 from 14.44 in October.
The index measuring expectations six months from now increased to a reading of
37.76 from 30.17 in September.
© 2006 Associated Press.
Editor's Note:
4. Fed's Poole: Aging Population May Curb Economy
The aging U.S. workforce and a declining number of people who want to work may
hit economic growth and make the U.S. central bank's job harder, St. Louis
Federal Reserve Bank President William Poole said Tuesday.
"If actual employment growth slows, we will have to make the judgment as to
whether the slowing is consistent with a slowing of trend labor force growth or
is a sign of impending recession," Poole told the Chartered Financial Analysts
Society of Philadelphia. A copy of his speech was made available to the media
prior to delivery.
Poole, who is a voter on the U.S. central bank's policy-setting committee, said
there was a clear consensus that the retirement of the baby boom generation and
a decline in the U.S. labor force participation rate would curb the economy's
potential for growth.
He also warned there was a wide degree of uncertainty over the scale of the
decline, with important implications for the Federal Reserve as it tries to
juggle its dual mandate to ensure price stability and sustainable long-term
employment.
"If employment growth next year remains only modestly below this year's average
pace of about 150,000 per month, we will have to make the judgment as to whether
this growth is outrunning available labor, which would be the case if we accept
the low estimate of trend labor force growth, or whether one of the higher
estimates of trend labor force growth is being realized," he said.
The Fed halted a two-year campaign of gradual interest rate hikes in August and
has left its key overnight federal funds rate target at 5.25 percent at its two
subsequent meetings, while warning that it remains on high alert over inflation.
Lower energy prices have curbed consumer prices since the Fed stopped hiking
rates, while the pace of economic expansion slowed sharply in the third quarter.
But the level of non-food, non-energy inflation remains a concern for the Fed,
while a drop in the unemployment rate in October to 4.4 percent has sparked
concern that the U.S. labor market may be already too tight, and that further
hiring could spark wage inflation.
Working out what is a "normal" level of job creation, and what could be too hot,
is a key task for policy-makers and it is getting much more complicated, Poole
said.
"With the baby boom generation starting to retire, we'll have to change our view
of normal job creation. Not to do so will invite a serious misperception of the
state of the labor market," he said.
© 2006 Reuters.
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