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Warren Buffett’s Berkshire Hathaway adds Express Scripts, dumps Deere

Warren Buffett Speaks At Economic Club Of WashingtonWarren Buffett Speaks At Economic Club Of Washington
A consortium backed by Buffett (above) and Gilbert is in the final round of bidding for Yahoo.Alex Wong — Getty Images

Warren Buffett’s Berkshire Hathaway likes the pharmacy business, again.

In the third quarter, Buffett’s insurance conglomerate added shares of Express Scripts (ESRX) to its widely followed investment portfolio. Express Scripts processes the paperwork for insurance companies and pharmacies, and makes sure the pharmacies get paid. Last year, it processed 1.3 billion insurance drug claims, making it the largest business in the field.

But it was not a large bet for Berkshire (BRK/A), and it’s likely the investment was made by either Todd Combs or Ted Weschler, who have started to manage a larger portion of Berkshire’s portfolio. The company added just over 449,000 shares of Express Scripts in the third quarter. Express Scripts’ stock closed Friday at $77.87, meaning Berkshire owns just $35 million worth of the company’s shares. Berkshire’s overall portfolio was nearly $107.8 billion at the end of September.

Buffett has said in the past that smaller positions are likely investments made by either Combs or Weschler. And Combs has liked pharmacy companies in the past. It is widely believed that Combs bought shares of pharmaceutical retail chain CVS Health (CVS), which owns Caremark, one of Express Scripts largest rivals, for Berkshire’s portfolio in late 2011. (Buffett and Berkshire do not break out the portfolios of Combs or Weschler.) Berkshire cashed out of CVS a year later, at a profit.

Berkshire made a few other changes to its portfolio in the third quarter. Berkshire sold all of its shares of Deere in the third quarter. It held nearly $360 million worth of the tractor maker’s shares at the end of June. Berkshire also added to its stake in car giant General Motors (GM) as well as credit card companies Mastercard (MA) and Visa (V), and tripled its stake in Liberty Media (LMCA), which is part of John Malone’s cable empire.

As for Express Scripts, Berkshire is buying in at a time when the company may be in need of a turnaround. Sales barely increased at the benefits manager in its last quarter. In early November, the company announced it was laying off 400 workers, in order to “rebalance its resources.” It also said prescription volumes had dropped and that the company had lost clients. Still, shares of the company are up 10% this year.