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Buffett's Berkshire Builds Verizon Stake, No IBM Buying Spree

Tickers in this article: IBM VZ WMT

NEW YORK (TheStreet) - Berkshire Hathaway disclosed on Thursday it had taken an over 11 million share stake in Verizon worth over $500 million. The conglomerate added marginally to its investment in IBM , amid the IT services giant's struggles.

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Berkshire said in a 13-F filing with the Securities and Exchange Commission , it bought 11 million Verizon shares and 7.35 million Liberty Global Class C  shares in the first quarter, two new positions and likely investments made by the conglomerate's rising stars Ted Weschler and Todd Combs.

IBM was the only company where Berkshire added to its so-called big four stock investments, which also include Wells Fargo , Coca-Cola and American Express . However, Berkshire's buying was limited to just 233,100 new shares, less than 1% of the company's overall investment in IBM. Other additions included Davita Healthcare Partners , US Bancorp and Liberty Global .

Berkshire also added to its investment in Wal-Mart and trimmed its investment in General Motors , Phillips 66 , Starz , and DirecTV . The company didn't close any investment positions in the quarter.

Berkshire Earnings

Earlier in May, Berkshire reported a 5% drop in its operating earnings to $3.5 billion as insurance margins at the Warren Buffett-conglomerate dropped, crimping profits.

Still, the company's first-quarter earnings indicate a continued payoff from bets Buffett has made on energy, infrastructure and an improving U.S. economy in the years since the crisis.

By Warren Buffett's preferred valuation metric, Berkshire Hathaway outperformed the S&P 500 , a reversal of a trend of under-performance in recent years.

Berkshire reported $45.4 billion in revenue and net income of $4.7 billion, or net earnings per share of $2,862 per Class A share. Operating earnings were $2,149 per Class A share, generally slightly below analyst consensus.

Of note, revenue at Berkshire's railroad, utilities and energy divisions rose to $9.75 billion, an over 20% rise in the first quarter from year-ago levels.

Insurance revenue, by contrast, rose marginally to $33.9 billion versus the first quarter of 2013. Overall, flat insurance revenues and rising costs meant Berkshire's net income fell slightly year-over-year.

Investment gains at Berkshire Hathaway surged to $1.059 billion for the quarter, up more than 100% from the $434 million in gains the company reported in the first quarter of 2013. Those gains were buoyed by $188 million in earnings attributable to Berkshire from its participation in the takeover of ketchup-maker H.J. Heinz , a deal announced in the first quarter of 2013.

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-- Written by Antoine Gara in New York.