According to various reports, Warren Buffett Berkshire Hathaway disclosed it had taken a stake in Deere Co. and other companies that represent basic industries.
In addition to Deere, the world's largest maker of farm equipment, the firm also purchased new stakes in Precision Castparts, a leading manufacturer of complex investment castings for aircraft engine, industrial gas turbine, airframe, and other applications. Buffett bought into WABCO, a maker of commercial vehicle braking, stability, suspension and transmission control systems.
While buying into leading industrial companies, Berkshire reduce consumer products stocks including Procter & Gamble, Kraft, VISA and Johnson & Johnson.
A report in Businessweek quotes Eli Lustgarten, an analyst for Longbow Research in Independence, Ohio, as saying Deere may benefit in coming decades as farmers seek to boost yields to feed a surging population. We have a massive need to increase productivity in the farm belts of the world, Lustgarten said. Deere is the global leader in making products to accomplish that. Best technology, best-managed company.
Deere, which reports fourth-quarter results next week, advanced 0.7% to $85.35 in extended trading yesterday in New York after Berkshire filing was released.
Berkshire held 3.98 million shares of the Moline, Illinois- based company at the end of the third quarter.
Deere traded as low as $72.85 in the three months ended September 30th and closed the quarter at $82.47. According to the Business Week report, the volatility may have given Berkshire a buying opportunity. Buffett, the world's fourth-richest person, has said he built his fortune by investing in companies the market mispriced.
The stock got hit a bit, Lustgarten said. The long- term outlook for Deere is what attracts people.
The holding adds to Berkshire investments tied to agriculture. Buffett praised employees at CTB Inc., a unit that makes products for the hog and poultry industries, saying in 2010 that it would expand for decades and was on a farming superhighway. Buffett's son Howard, a farmer and Berkshire director since 1993, endorsed the deal to buy CTB in 2002.
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