Buffett’s Berkshire Hathaway Makes Some Huge Changes to Its Portfolio

In the world of investing, Warren Buffett is king, so when his Berkshire Hathaway (NYSE:BRKA) dumps almost all of its stakes in two major Dow players, investors sit up and take notice.

Berkshire has all but eliminated its position in Johnson & Johnson (NYSE:JNJ) and General Electric (NYSE:GE), according to its 13-F filing with the Securities and Exchange Commission. The company held just over 492,000 shares of J&J as of September 30 — that’s down 95 percent from the 10.3 million shares it reported holding as of June 30. Berkshire’s GE stock has been slashed to 588,900 shares, down 88 percent from just north of five million shares three months earlier.

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Unsurprisingly, shares turned negative following the news. Buffett’s decisions have the power to do that — news of changes to his portfolio can sometimes be as potent a stimulus as earnings.

But Buffett isn’t pulling all the strings anymore. The hedge fund’s partial liquidation of some massive holdings suggests the transfer of more investment duties to the next generation of Berkshire stock pickers: Todd Combs and Ted Weschler, Berkshire’s new portfolio managers.

Berkshire significantly decreased its holdings in United Parcel Service (NYSE:UPS), Lee Enterprises (NYSE:LEE), and Kraft Foods Inc., before the spin-off that resulted in two separate publicly-traded companies. Visa (NYSE:V), Verisk Analytics (NASDAQ:VRSK), ConocoPhillips (NYSE:COP), Procter & Gamble (NYSE:PG), and US Bancorp (NYSE:USB) were also cut, though Berkshire held on to the majority of its share in each.

Berkshire also eliminated positions in some relatively new holdings, CVS Caremark Corp. (NYSE:CVS) and Dollar General Corp. (NYSE:DG), again suggesting that the hedge fund’s new talent, handpicked by Buffett himself, is taking Berkshire in a new direction.