Investors follow Buffett into Verizon Post DirecTV Success

Warren Buffett won big from his DirecTV, $DTV, stake Monday after AT&T, $T, announced plans to acquire the satellite company for $48.5 billion. And investors on are now debating whether they should follow Buffett’s lead into AT&T competitor Verizon, $VZ.

Buffett’s Berkshire Hathaway, $BRK.A, had 34.5 million shares of DirecTV, as of a recent government filing. That stake is worth about $3.3 billion, given AT&T’s announced $95-per-share offer. Buffett made at least 25% on his shares given the change in price from when his stake was first disclosed until now.

Buffett owns 7% of $DTV – he wins again $BRKB (long)

— vcutrader (@vcutrader) May. 12 at 07:09 PM

Buffett can’t spend his winnings yet. Regulators still must approve the merger, which some could object to on grounds that the combined entity would potentially monopolize television coverage in some areas. The merger is also contingent on DirecTV continuing its deal with the National Football League to broadcast every Sunday football game. DirecTV charges $40-per-month for the “Sunday Ticket” package and reportedly pays the NFL about a billion a season.

But the fact that the DirecTV bet likely paid off for Buffett has StockTwits’ users looking at another telecommunication companies in Buffett’s recently disclosed portfolio—namely Verizon. According to a May 2015 SEC filing, Buffett had more than 11 million shares of Verizon as of March 31.

The stake is estimated at $529 million. That’s not much of Berkshire Hathaway’s $118.5 billion portfolio, but the success of Buffett’s investment in DirecTV indicates he and his investment deputies know the communications space well enough to pick winners. Verizon shares edged higher Monday.

Can you hear Warren Buffett now? $BRKA/$BRKB adds $VZ as new holding in Q1. $VZ up about 1% after hours.

— Paul La Monica (@lamonicabuzz) May. 15 at 04:11 PM

Some investors said following “smart money” 13F filings is not a good idea. First of all, Buffett’s filing meant Berkshire held those shares in March, not that the firm still holds them. Second, the big guys sometimes get incentives to take stakes that retail investors can’t dream of. Perhaps most importantly, according to some investors, Berkshire Hathaway’s chart doesn’t look poised for more big gains.

$BRK.A $study the charts.

— Michael McCreary (@GannWaveTA) May. 17 at 12:12 AM

Still, most investors watch Buffett’s filings closely. A company with $118 billion in investments can be wrong, but it wouldn’t have that much money if it weren’t right much of the time.

$DTV Warren Buffett / Berkshire gets a 300mm bonus on the back of the DirectTV + $ATT deal… not bad! |

— Hart Lambur (@hlambur) May. 18 at 05:29 PM

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