On Tuesday, the news wires reported that Warren Buffett hired a second manager to help him run Berkshire Hathaway's investment portfolio. Berkshire announced that Ted Weschler would be joining the firm in early 2012. In the meantime, Weschler will be winding down his hedge fund Peninsula Capital Partners. To get a better feel for Weschler's investment style, based on filings with the Securities and Exchange Commission as of the end of the second quarter, these were his fund's five largest holdings.

Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

Satellite television provider DirecTV (NYSE:DTV) was Weschler's largest holding at approximately 26%, as of the end of June. The position has likely been handsomely profitable for investors as DirecTV has managed to post impressive growth, which has come despite an onslaught of competition from archrival Dish Network Corp (Nasdaq:DISH), cable television rivals and Internet-based programming. Over the past three years, sales are up nearly 12% annually while profits have jumped at an over 20% annual clip. Strong share price performance has pushed the trailing free cash flow multiple up to 13.5.

WR Grace
Specialty chemical provider W.R. Grace (NYSE:GRA) was the next largest holding at just more than 25%. W.R. Grace has seen more erratic sales growth over the past three years, which is likely a result of an uneven global economy and demand for chemicals that go into transportation fuels, sealants and coatings. But while industrial demand has been down and annual sales have declined nearly 5% over the past three years, profits are up an impressive 35% annual clip over this period. As a result of the stellar profit gains and looking at the stock chart, this has likely been Weschler's biggest winner. The free cash flow multiple has also increased and currently stands at close to 13.

(NYSE:DVA) runs dialysis centers throughout the U.S. and weighed in at about 19% of the portfolio. Operationally, DaVita has been only an average performer over the past three years, with annual sales growth of 7% and more modest earnings growth of 3.5%. However, as one might expect, its results were unaffected by the credit crisis as patients require dialysis services regardless of the economic climate. As a result, the share price performance has also been stable and the stock has outperformed the market by a wide margin over the past few years. The trailing free cash flow multiple currently stands at about 13.3.

Liberty Media
Another large media play listed in the quarterly filing was John Malone's Liberty Media. It listed class A shares, which are most likely holdings of Liberty Interactive (Nasdaq:LINTA). As with W.R. Grace, annual sales growth has been extremely modest at less than 5% annually over the past three years, but profits have zoomed forward at a nearly 28% annual clip. The stock has followed the strong trends at assets that include interests in QVC shopping, Expedia and SiriusXM (Nasdaq:SIRI). The free cash flow valuation also remains relatively low at below 10.

Rounding out the top five holdings as of the end of June was marketing services firm Valassis Communications Inc. (NYSE:VCI). Valassis made up about nearly 8% of the portfolio and provides numerous marketing and advertising services, including direct mail campaigns and media placement services. Yet again, sales growth has been very modest at just over 1% over the past three years, but profits are up more than 83% annually over this time frame. The trailing free cash flow multiple is similar to that of Liberty Media at around 10.

The Bottom Line
Investors are still getting familiar with Weschler, but his picks and reported performance appear to be impressive. A Wall Street Journal article detailed performance relayed by a current investor with Weschler that a $100 investment on Jan 14, 2000 would have grown to $1,134 through last August. These holdings are good grounds for further research and those further interested in dissecting Weschler's recent stock picks. (For additional reading, take a look at What Is Warren Buffett's Investing Style?)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  2. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  3. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  4. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  10. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hunting Elephants

    The practice of targeting large companies or customers.
  3. Warren Buffett

    Known as "the Oracle of Omaha", Buffett is Chairman of Berkshire ...
  4. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  5. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  6. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!