Warren Buffett's Valentine's Day surprise for investors

By Lauren Young

NEW YORK (Reuters) – Warren Buffett had for the investors of Teva Pharmaceutical Industries Ltd a Valentine's Day surprise ready.

A regulatory filing with the U.S. Securities and Exchange Commission (SEC) known as 13F shows that Buffett's Berkshire Hathaway Inc. acquired a stake in the generic drug manufacturer in the fourth quarter of 2017. The news caused Teva shares to rise by more than 10 percent on February 14.

Hedge funds are particularly secretive about their portfolio holdings, with quarterly disclosures providing insight into the purchases and sales of influential asset managers.

The 13F filings are posted on the SEC's website 45 days after the end of each quarter. Once they are received, the Reuters equity team in Bangalore pulls the data into an Excel spreadsheet. They work with our investment team in New York to look for quarterly changes in equity holdings as well as new positions.

While holdings in larger companies make headlines, we also pay attention to holdings of over 20 percent in small or mid-sized companies. It's also news when a hedge fund sells off a major holding.

By analyzing the activities of smart money, we can identify investment themes and trends. At the end of 2017, for example, large hedge funds were betting on companies that would benefit from rising wages and prices.

Greenlight Capital's David Einhorn has built 13 new positions in consumer discretionary companies, including shares in theme park company SeaWorld Entertainment Inc. at photo printing service Shutterfly Inc and at the department store Nordstrom Inc. .

Because 13F disclosures come more than a month after the quarter-end, they may not reflect current positions in actively traded hedge funds. However, for more traditional buy-and-hold investors like Buffett, the filings provide insight into investment strategy.

In addition to Teva, Buffett bought additional shares of Apple Inc in the fourth quarter and sold the majority of International Business Machines .

“It makes sense to follow 13Fs,” says Jennifer Ablan, editor at US Investments. “It's one of the few documents we have that describes in detail what the big money is doing in the stock market.”

See the article at https://www.reuters.com/article/us-investment-funds-berkshire/berkshire-buys-teva-feels-ibm-blues-as-apple-becomes-top-investment-idUSKCN1FY33P.

(Reporting by Lauren Young; Editing by Toni Reinhold)