Following the legendary Warren Buffett's stock portfolio is an education in itself. Since 1982, Berkshire Hathaway Inc has made 148 acquisitions while taking stakes in 62 companies. Berkshire has made 100 divestitures during 1982-till date.

Over the last 44 years (that is, since present management took over) Berkshire's book value has grown from $19 to $70,530, a rate of 20.3% compounded annually. In just one out of last nine years, Berkshire couldn't outperform Dow Jones Industrial Average (DJIA). However, what is more concerning is, Berkshire's net worth declined in 2008 by $11.5 billion, which reduced the per-share book value of both the firm's Class A and Class B stock by 9.6%. So, what we are tempted to ask: is the legend losing track? Before trying to answer this question, let's see how Berkshire generates value for the stock holders.

Berkshire has two major areas of value. The first is its investments: stocks, bonds and cash equivalents. At year end 2008 those totaled $122 billion (not counting the investments held by the finance and utility operations, which the group assigns to its second bucket of value). About $58.5 billion of that total is funded by the insurance float.

Berkshire's second component of value is earnings that come from sources other than investments and insurance. These earnings are delivered by the group's 67 non-insurance companies.

Recently Berkshire took stakes in Exxon Mobil Corp. (XOM) and Nestle SA, betting on the world's biggest oil and food companies.  Berkshire held about 1.28 million Exxon shares and 3.4 million American depositary receipts of Nestle at the end of the third quarter, the Omaha, Nebraska-based company said in a regulatory filing Monday. The stake in Irving, Texas-based Exxon would be worth about $95 million, based on Monday's stock price, while the Nestle holding would be valued at $161.5 million. Berkshire also raised its stake in Wal-Mart Stores Inc., the largest retailer. Table given below lists the Berkshire's stock portfolio as on end Sep 2009.

Since long Buffet has been a value investor in the mold of earlier investing legend Benjamin Graham. But watching Berkshire's investments over the past few years, I am tempted to ask is he changing tracks? Of course, during a recent conference, he reiterated that his investment selection process remains the same. However, I am tempted to say he might have changed tracks as Berkshire's portfolio is closely following that of DJIA. The table given below gives an overview of Berkshire's portfolio as of end Sep 2009.

Berkshire, whose U.S. stock portfolio was valued at $56.5 billion at the end of the third quarter, is benefiting from the biggest rally in the DJIA since 1933. The recent additions to Berkshire portfolio were DJIA stocks. While Berkshire's portfolio would benefit from a rally in DJIA, it would also suffer when DJIA goes down. I am tempted to say that the legend is finding it hard to find nuggets outside of the major indices these days.