Berkshire lowered its stake in Johnson & Johnson 54 per cent to 28.6 million shares in the three months ended December 31 and reduced its stake in Procter & Gamble by 9 per cent to 96.3 million shares.
It also disclosed a new 8.74 million share stake in water treatment services provider Nalco Holding Co, worth $100.8 million as of December 31. Nalco shares rose 6.7 per cent after-hours.
Buffett has deployed at least $11.6 billion in the last five months to buy convertible securities, preferred stock and debt issued by General Electric Co, Goldman Sachs Group Inc, reinsurer Swiss Re, jewelry maker Tiffany & Co and others, all yielding at least 10 per cent.
Berkshire's portfolio of US-listed equities shrank 26 per cent in the quarter to $51.87 billion from $69.89 billion.
But the company held onto 290.2 million shares of Wells Fargo & Co, although its value fell 22 per cent in the quarter to $8.55 billion, and a 151.6 million share stake in American Express Co, whose value fell 48 per cent to $2.81 billion. Berkshire's stake in US Bancorp fell 7 per cent to 67.6 million shares.
"The big story is that he's not giving up on banks and financial institutions," said Michael Yoshikami, president of YCMNET Advisors in Walnut Creek, California, which owns Berkshire shares.
"It shows his conviction that, once the deleveraging process is complete, companies with strong cash flow are going to be valued more highly by investors," Yoshikami added. "He's getting 10 to 15 per cent interest on money he lends and may be selling stocks to fund that. He has become the secondary lender of choice to the financial world."
Buffett, through his assistant Carrie Kizer, was unavailable to comment.