Buffett’s Berkshire Increases Stakes in J&J, Sanofi

Warren Buffett’s Berkshire Hathaway Inc. almost doubled its stake in Johnson & Johnson and bought more Sanofi-Aventis SA in the first quarter, increasing investments in the health-care industry.

Berkshire bought 24.1 million shares of J&J, the world’s biggest health-care products company, to finish March with 48.7 million, the firm said in a filing with the U.S. Securities and Exchange Commission yesterday. The company boosted the number of American depositary receipts it held in Sanofi, France’s largest drugmaker, 70 percent to 828,500, and disclosed an investment in WellPoint Inc., the No. 1 U.S. health insurer, for the first time.

Buffett, Berkshire’s 76-year-old billionaire chairman, built the Omaha, Nebraska-based company over four decades, remaking a failing textile manufacturer into a $168.4 billion holding company by buying out-of-favor stocks and companies. Shares of Johnson & Johnson slid 8.7 percent in the first quarter, underperforming the 0.6 percent gain in the Standard & Poor’s 500 Health Care Index.

“Health care is one of the areas where he’s been conspicuously light,” said Frank Betz, a partner at Carret Zane Capital Management in Warren, New Jersey, who helps manage $800 million, including Berkshire shares. “Given his proclivity for size and industries he can understand, the health-care industry fits that bill.”

Health-related companies represented $3.1 billion, or 5.4 percent, of Berkshire’s $57.5 billion in U.S. stocks as of March 31. The company has been building the stake in New Brunswick, New Jersey-based Johnson & Johnson, which makes up the bulk of the health portfolio, since the beginning of 2006. The stock rose $1.29, or 2.1 percent, to $63.11 at 11:48 a.m. in New York Stock Exchange composite trading and is up 4.8 percent since March 31.

H&R Block, Ameriprise

The ADRs of Paris-based Sanofi, each representing half an ordinary share trading in France, dropped 5.8 percent during the quarter. They rose 33 cents to $46.47 as of 11:48 a.m. and are up 6.8 percent since March. Total SA, Europe’s third-largest oil company, said earlier this month is planned to sell its 12 billion euro ($16.3 billion) stake in Sanofi.

Berkshire, which hadn’t disclosed an investment in WellPoint before, said it owned 979,700 shares as of March 31. It’s difficult to determine if Buffett bought the stake during the quarter, since he sometimes requests the SEC’s permission to keep holdings temporarily confidential to avoid copycat investing. Shares rose 88 cents, or 1.1 percent, to $84.43 at 11:48 a.m. and are up 7.3 percent since the beginning of the year.

Berkshire pared other holdings, further reducing its stakes in H&R Block Inc., the largest U.S. tax preparer, and Ameriprise Financial Inc., the investment adviser spun off from American Express Co. in 2005.

The company, which was the third-largest shareholder in H&R Block in 2005, sold more than two-thirds of its remaining stake in the Kansas City, Missouri-based company during the quarter, ending March with 1.25 million shares. It cut its stake of Minneapolis- based Ameriprise by almost half to 4.28 million shares.

Wells Fargo

Separate filings showed Berkshire has been building stakes in the railroad industry for at least the past three quarters. The company, which last month disclosed an 11 percent stake in Burlington Northern Santa Fe Corp., has also been buying Union Pacific Corp. and Norfolk Southern Corp.

As of March, the company held 10.5 million shares of Omaha- based Union Pacific, the country’s largest railroad, and 6.36 million of Norfolk, Virginia-based Norfolk Southern Corp., the fourth-largest.

Buffett also boosted the company’s holding in San Francisco- based Wells Fargo & Co., the largest bank on the U.S. West Coast, 14 percent to 232.2 million shares.

Holdings that trade on non-U.S. exchanges aren’t reported to the SEC.

SOURCE: BLOOMBERG.COM