“We manage all of our pensions internally, except for those connected with the utility business,” Buffett said today in an interview with CNBC. “We are all-equities, anyways. We don’t have any bonds in our pension funds.

”That Buffett favors stocks over bonds is well-known. He built Berkshire into the fifth-biggest company in the world by market value using funds from insurance subsidiaries to invest in equities and make acquisitions. Two years ago, he called bonds “among the most dangerous of assets” and said yields were too low to compensate investors for the risk of inflation.

What’s less talked about is how he’s taken a similar approach with Berkshire’s billions of dollars in pension assets.

Over the past few years, Buffett’s deputy investment managers, Todd Combs and Ted Weschler, have reshaped the portfolios backing obligations to retirees at units including railroad BNSF and auto insurer Geico. The strategy saves Berkshire fees it would pay to outside asset managers and could reduce the need for future contributions to the pensions.

Like their boss, Weschler and Combs concentrate their stock picks. BNSF’s portfolio, which was valued at $2.5 billion as of Dec. 31, liquidated hundreds of holdings as the deputies took over. By the end of last year, more than 60 percent of the plan assets were in just four U.S. equities and almost all the rest was in other stocks. Fixed-income securities accounted for about 1 percent.

David Fuller's view

I managed to catch Warren Buffett’s comments this morning on Berkshire’s pension funds and they certainly astonished the CNBC team. 

Wall Street was reeling on Wednesday and soft this morning but Buffett was talking about buying shares during yesterday’s fall and concluding another big takeover – Van Tuyl Group, the largest privately held chain of auto dealerships.  He also said he would buy more shares if the market fell further today.

I credit him with steadying the market as these comments made the rounds.  Imagine what might have happened if he had said Wall Street was overvalued and due for a shakeout.

There is a valuable message in this for all investors.  Buffett is well known for saying that he prefers industries that have moats around them, keeping competitors at bay.  Similarly, if the individual shares you own are global Autonomies, which have dominant positions in their industries by definition, and if they are on reasonable valuations and have good yields, you can ride out any market shakeout and take advantage of it by investing accumulated dividends or other cash in the same or similar instruments.