Duracell trade is sign Buffett is bearish on P&G

Why Buffett bought Duracell
Why Buffett bought Duracell   

Warren Buffett rarely sells stock. On Thursday, he unloaded Berkshire Hathaway's entire $4.7 billion stake in Procter & Gamble for P&G's Duracell battery business.

That's surely a sign the Buffett isn't all that confident about P&G's long-term future.

P&G, the global beauty and home products maker, added about $1.8 billion in cash to the deal. That values Duracell itself at about $2.9 billion. Buffett could presumably have just given P&G stock worth that amount and kept the remaining shares. Instead, he unloaded all 52.8 million shares and, like someone using a dollar bill to buy a 75 cent candy bar, got some change back.

Read MoreBerkshire Hathaway to buy Duracell from P&G

As Sanford Bernstein analyst Ali Dibadj told Reuters, "I don't take it as a good sign that Buffett would rather own Duracell than P&G."

Why Warren Buffett wants Duracell
Why Warren Buffett wants Duracell   

There are, of course, some solid reasons Buffett might want to own Duracell. He has called it "not very exciting, but a good solid business" and it has a strong brand, something he traditionally likes. While the nonrechargeable alkaline battery business doesn't appear to have a lot of growth potential, Duracell will generate a solid stream of cash. There are also some tax advantages to this kind of trade.

"I have always been impressed by Duracell, as a consumer and as a long-term investor in P&G and Gillette," he said in announcing the deal. "Duracell is a leading global brand with top quality products, and it will fit well within Berkshire Hathaway."

Berkshire observer Lawrence Cunningham, a George Washington University law professor, told Dow Jones he thinks Berkshire has been converting some of its stock stakes into stable, cash-generating businesses as part of a succession plan.

While Buffett rarely sells stock, Thursday's deal isn't unprecedented for him. In recent years, Berkshire has exchanged Phillips 66 shares for its pipeline-lubricant unit and Graham Holdings stock for a Miami TV station and some cash.

Warren Buffet's big bet on batteries
Warren Buffet's big bet on batteries   

Even so, Buffett probably wouldn't have made this trade if he thought P&G has a bright future.

It was never a stock that he picked for the portfolio. Berkshire got its shares in 2005 when P&G bought Gillette, which then owned Duracell. Buffett was a long-time supporter of the razor company as its largest shareholder and past board member.

Over the years, Berkshire cut its P&G stake in half. In 2012, he told CNBC the company's earnings "have been disappointing now for a few years. ... What goes on in the place, what mistakes have been made, what the plans are, I don't know the answers on that. ... The jury's out on that."

It now appears the jury has come back with its verdict.