WHAT'S IN BUFFETT'S SHOPPING BAG.

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Author: Carter, Adrienne

STOCKS

Few investors are watched more closely than Warren E. Buffett, chairman and CEO of Berkshire Hathaway Inc.. But The Buffett Show has been pretty boring in recent years. The budget-conscious sage was sitting on a $43 billion pile of cash at the start of the year, complaining that stocks were too expensive. As he told shareholders at his confab back in April: "If the market gets cheaper, we will have many more opportunities to do something intelligent with the money."

Now, it seems, the price is right. Berkshire's latest quarterly filings with the Securities & Exchange Commission show that it spent $5.7 billion on equities in the first three quarters of the year. At that rate, estimates Glenn Tongue of fund firm T2 Partners LLC, Berkshire's net equity purchases could hit $8 billion by the end of the year -- a big jump from the $822 million total for 2004.

What is Buffett buying? One stock he's snapping up is Wal-Mart Stores Inc.. Buffett has long lauded the giant retailer's management team and has said he made a mistake in not buying the stock in the late 1990s. Now it's just as cheap as it was back then, and in the last two quarters Berkshire has bought 19.9 million shares, worth around $874 million as of Sept. 30. Berkshire has also scooped up 44.7 million shares of Anheuser-Busch Cos., or 5.75% of the outstanding shares, since late last year.

SEC filings are of no help in deciphering the rest of Buffett's buying spree. In a recent report, Berkshire even says it's not disclosing the size of its current stakes in major investments H&R Block Inc. and Wells Fargo & Co. Under SEC rules, Berkshire doesn't have to reveal holdings publicly if that might hamper its investment strategy by, for example, indicating that it's buying or selling. Berkshire went silent on its position in Walt Disney Co. when it started selling out of the media company in the late 1990s.

But according to its latest filing with the National Association of Insurance Commissioners, Berkshire -- through its GEICO and General Reinsurance Corp. subsidiaries -- added 20 million shares of Wells Fargo in September, upping its holding to 76.4 million, or just under 5% of the stock. It also bought 15 million shares of European liquor company Diageo PLC in August, according to the filings.

Meanwhile, Buffett has been taking flak for his bet against the U.S. dollar, now around $16.5 billion. He jumped into foreign-currency derivatives back in 2002, believing that the mounting U.S. trade deficit would hurt the dollar. But this year that investment is down $897 million as the dollar has risen against the euro and other currencies. Overall, though, Buffett's foreign-currency holdings are up $2.1 billion since 2002 and gained $29 million in the third quarter, notes Berkshire's quarterly report.

For Buffett watchers who have been sitting on the sidelines, Berkshire's latest moves provide plenty of opportunity to jump back into the game.

$5.7 BILLION The amount of money Berkshire Hathaway has poured into equities in the first three quarters of 2005

Data: SEC

Copyright The McGraw-Hill Companies, Copyright 2005

PHOTO (COLOR): BUFFETT

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By Adrienne Carter