Lessons From Buffet

Warren Buffet’s Berkshire Hathaway (BRK-A) revealed its holdings in a regulatory filing with the SEC. According to Bloomberg the company boosted its stake in Kraft Foods (KFT), Wells Fargo (WFC), as well as refrigeration-equipment maker Ingersoll-Rand (IR). Buffet even added to his stake in insurers United Health (UNH) and WellPoint (WLP) even after those companies lost nearly half their market values in the quarter. Earlier this month, Buffet told reporters that it didn’t bother him if a stock fell 50%. “If we’re going to be buying things,” he said, “we want to buy them on sale.” See Professor Kevin Depew’s Best Of Breed: Three Consumer Staple Plays With An Edge.

From the Bull Pen: The bull lesson is that there are a number of consumer staples plays in Buffet’s portfolio; companies with solid pricing power even as consumers face high energy costs. Bulls can play Darling International (DAR); sell-stops below $14.

From the Bear Cave: Bears can play the downside in WLP, buy-stops can be set above $53.


Diesel In High Fashion

According to the Wall Street Journal, rather than ramp up gasoline production ahead of the summer driving season, U.S. refiners are shifting towards more production in diesel fuel. Chief Economist Lynn Westfall at Tesoro Corp (TSO) said, “The economics are telling us not to max out the amount of gasoline [but] to max out the amount of diesel.” Valero Energy (VLO) also said it is attempting maximize diesel production. But refiners are limited in how much they can do in the short term as companies must retool facilities with expensive equipment which could take years before changes could materialize. For context, see Professor Mish Shedlock’s Why Do Oil Prices Keep Rising?

From the Bull Pen: Is the oil ETF (USO) finding support near $100. Those bullish can play the upside with sell-stops below.

From the Bear Cave: Although the refiners are attempting to make changes, bears believe it’s too little too late. Bears can play the downside in VLO, buy-stops can be set above $48.50.

For more ideas in real time throughout the trading day, check out Minyanville’s Buzz & Banter.


Quick Check Around the World

Asian trading closed with the Hang Seng +0.41%, Nikkei -0.23%, Sensex +0.47%, Taiwan +0.44% and Shanghai -0.36%.

Glancing towards Europe, we spy the CAC +0.87%, DAX +1.54%, FTSE +1.32%

As of 8:50 AM EST, S&P futures are up +3.2 points to 1427, and Nasdaq futures are higher +2.25 to 2038.


A Look At Commodities

Commodities are higher. Crude oil is higher +2.74 to 126.83. Gold is up +19.30 to 899.20. Silver is higher +0.173 to 16.800, and copper is up +7.75 to 383.85.

The dollar index is lower -0.235 to 73.115.


On the Radar

Economics

Housing Starts: 1032 k vs. 939 k cons.
Building Permits: 978 k vs. 915 k cons.

10:00 U. of Michigan Confidence: 62.5 cons.

TGI Friday! Good luck!