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.

DirecTV
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.

DaVita
DaVita
(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.

Valassis
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. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  2. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  3. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
  4. Investing News

    Bank Stocks: Time to Buy or Avoid? (WFC, JPM, C)

    Bank stocks have been pounded. Is this the right time to buy or should they be avoided?
  5. Stock Analysis

    Why the Bullish Are Turning Bearish

    Banks are reducing their targets for the S&P 500 for 2016. Here's why.
  6. Stock Analysis

    How to Find Quality Stocks Amid the Wreckage

    Finding companies with good earnings and hitting on all cylinders in this environment, although possible, is not easy.
  7. Investing News

    What You Can Learn from Carl Icahn's Mistakes

    Carl Icahn has been a stellar performer in the investment world for decades, but following his lead these days could be dangerous.
  8. Stock Analysis

    If You Had Invested Right After Berkshire Hathaway's IPO (BRK.A)

    Learn how much you would now have if you had invested right after Berkshire Hathaway's IPO, and find out the classes of shares that you could invest in.
  9. Economics

    How Warren Buffett Made Berkshire A Winner

    Berkshire Fine Spinning Associated and Hathaway Manufacturing Company merged in 1955 to form Berkshire Hathaway.
  10. Investing News

    What Does the Fire Monkey Mean for Your Portfolio?

    The Chinese new year this year corresponds to the monkey, a quick-witted, playful, tricky figure that means well but has a penchant for causing trouble.
RELATED FAQS
  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 >>
COMPANIES IN THIS ARTICLE
Trading Center