Berkshire Hathaway's (BRK.A) (BRK.B) second-quarter 13-F filing, which details the firm's equity holdings, continued to show evidence of the primary theme that we expect to drive portfolio movements over the near to medium term. With Berkshire's appointment of Ted Weschler and Todd Combs as lieutenants to Warren Buffett, the company has been active over the last several quarters selling legacy positions in order to free up cash for the two managers to invest, with purchases made by Weschler and Combs making up the bulk of the buying activity.

During this transition phase, which could take several years to accomplish as Weschler and Combs take over more and more of the stock investment portfolio, we expect Berkshire's equity holdings to fluctuate much more frequently than investors have become accustomed to over the years. Furthermore, based on early evidence, it looks like these two managers may not be such strict adherents to the buy-and-hold strategy preached by their boss and mentor, with portfolio turnover likely to be much higher longer term, in our view.