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Berkshire Coverage

How to Tell if Your Fund Invests With Buffett

Fund portfolio and Berkshire Hathaway shareholder data show which funds hold significant chunks of the company's stock.

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Fund investors, you may be investing with Warren Buffett and not even know it. The investing legend's firm, Berkshire Hathaway (BRK.A) (BRK.B), which holds its annual meeting Saturday, can be found in many mutual fund portfolios. Of course, unlike many of the individual company names found in fund portfolios, investing in Berkshire is almost akin to investing in another fund. The firm owns outright or invests in scores of companies, from giants such as the Burlington Northern Santa Fe to small businesses such as The McDowell News newspaper in Marion, N.C. (estimated population: 7,854).

Owning Berkshire Hathaway offers fund managers one-stop-shopping access to a diversified portfolio of companies, all vetted by Buffett and based on his classic value-oriented approach. It's almost like having Buffett as a subadvisor on the fund, not that your fund manager is likely to admit that.

To determine whether Berkshire Hathaway is a significant holding in your fund's portfolio, just go to an individual fund's Quote page on Morningstar.com, click on the Portfolio tab, and select the Holdings link, where you'll see a list of the fund's 25 largest holdings. Premium Members can click on the Premium Details link to drill down further.

Another option, if you're a Premium Member, is to use the Instant X-Ray tool or the X-Ray tool in Portfolio Manager and click on the (Stock) Intersection link to see whether Berkshire Hathaway makes up a substantial portion of your holdings. If it does, you're in good company. Berkshire makes up 5% or more of the portfolios of several funds, and others aren't far behind. Fidelity Contrafund (FCNTX), one of the largest stock funds available in terms of assets, lists Berkshire Hathaway as its number-three holding (behind Google (GOOG) and Apple (AAPL)) at about 4% of the portfolio. Given the fund's size, it is also among the largest holders of Berkshire Hathaway stock.

To find other funds with a significant portion of their assets invested in Buffett's firm, simply click on the Shareholders tab on the Berkshire Hathaway Quote page on Morningstar.com and then select the Concentrated Shareholders link. The list you'll find includes a handful of funds Morningstar analysts recommend. Below is a sampling of funds that have significant concentrations in Berkshire's A shares. Note that Berkshire's B shares have different Concentrated Shareholders, though there is some overlap with the A shares.

Sequoia (SEQUX)
Perhaps the best-known of the Buffett-style funds (and one Buffett himself referred investors to after closing his own investment partnership in 1969), this Gold-rated fund has become somewhat less concentrated in recent years and now holds about 45 stocks in its portfolio. Turnover remains low at just 5%. Berkshire is the fund's second-largest holding at nearly 11% of the portfolio (as of the end of 2012), just behind Valeant Pharmaceuticals International (VRX). In years past, Berkshire had made up as much as 37% of the fund's holdings (in 2004). Fund managers Bob Goldfarb and David Poppe, Morningstar's Domestic-Equity Fund Managers of the Year in 2010, place a greater emphasis on company management than does Buffett. At the end of last year, the fund was heavy in consumer cyclical, health-care, and industrials stocks while holding 16% of its assets in cash, well above the large-blend category average of 2%.

FAM Value (FAMVX)
Another Buffett-styled offering, this fund uses a low-turnover, value-focused strategy designed to avoid a permanent loss of capital. The fund, which carries a Bronze Analyst Rating, often lags during rallies but outperforms in down markets. Although falling in the mid-growth category, the fund invests across the market-cap spectrum in search of firms with competitive advantages, high profit margins, and strong free cash flows. The fund holds about 40 stocks, led by insurance company Brown & Brown (BRO) (7% of the portfolio as of March 31), industrial firm Idex (IEX) (5%), and Berkshire Hathaway (5%). The fund's parent, Fenimore Asset Management, carries a positive Pillar rating and is a small, well-run firm with a good stewardship profile.

Davis NY Venture (NYVTX)
This Gold-rated fund's experienced management team prefers undervalued stocks but will pay more for companies whose business models they consider to be worth it. Their consistent approach has caused the fund to look out-of-favor at times. Performance in recent years has been subpar, partly because of the fund's overweighting in financial-services stocks, which currently make up more than one third of the portfolio, more than double the large-blend category average. Top holdings include Bank of New York Mellon (BK), CVS Caremark (CVS),
American Express (AXP), and Berkshire Hathaway, all at around 5%-6% of the portfolio. The fund may charge a load, but a similar no-load option, Selected American Shares (SLADX), is available without a sales charge.

Adam Zoll does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.