Warren Buffett stocks ranked

04 Mar, 2022 - 00:03 0 Views
Warren Buffett stocks ranked Warren Buffett

eBusiness Weekly

Warren Buffett’s stock selections don’t look like how they used to.

The Berkshire Hathaway (BRK.B) equity portfolio has undergone a lot of upheaval over the past decade. For one, Berkshire Hathaway’s investment arm has gained a taste for growth plays. While old-guard favourites such as American Express and Coca-Cola still hang around, Buffett & Co. have taken a shine to stocks such as Apple and Amazon.com, and even lesser-known firms such as Snowflake and Nu Holdings.

But the Berkshire Hathaway portfolio also has gone through several haircuts over the past couple years or so. Buffett has trimmed or cut dozens of stocks as the Covid-19 pandemic drastically altered the investment landscape. He owned several airlines at the start of 2020; now he holds none. Banks were aces among Buffett stocks to begin 2020; Berkshire has spent the past two years kicking them to the curb.

In fact, “Uncle Warren” just kept on selling all the way into the end of 2021.

Buffett broke out the broom yet again in the fourth quarter of the year, trimming or outright cutting 10 positions. He did replace a few outgoing stocks by adding to his positions and initiating three new stakes. That’s according to its most recent Form 13F regulatory filing, submitted to the Securities and Exchange Commission on February 14.

If you want to know which stocks legendary investor Warren Buffett feels are worth his time and attention, look no further than the Berkshire Hathaway equity portfolio. (And as always, remember: A few of these Buffett stocks were actually picked by portfolio managers Todd Combs and Ted Weschler.)

1. Apple
Warren Buffett absolutely adores Apple (AAPL, US$168,88).
“I don’t think of Apple as a stock,” Buffett has said about Apple.
“I think of it as our third business.”

It might as well be. The tech giant represents nearly half of the assets in the Berkshire Hathaway equity portfolio. And Berkshire is Apple’s third-largest investor with an 887 million-share stake representing about 5,4 percent of all shares outstanding. Only Vanguard and BlackRock — giants of the passively managed index fund universe — hold more Apple stock.

The Oracle of Omaha has only occasionally dabbled in technology stocks. But he bought Apple with two fists, and he’s more than happy to discuss his ardor for AAPL. As he has said more than once on CNBC, he loves the power of Apple’s brand and its ecosystem of products (such as the iPhone and iPad) and services (such as Apple Pay and iTunes).

“It’s probably the best business I know in the world,” Buffett said a year ago.

“And that is a bigger commitment that we have in any business except insurance and the railroad.”
This has been an exceptionally fruitful investment for Buffett. AAPL shares have returned 570 percent since the end of Q1 2016, when Berkshire initiated its stake. That’s roughly four times better than the broader market.

2 Bank of America

Buffett spent most of 2020 and 2021 hacking and slashing at his various bank-stock holdings. But he remained as committed as ever to Bank of America (BAC, US$47,42).

Buffett’s interest in BAC dates back to 2011, when he swooped in to shore up the firm’s finances in the wake of the Great Recession. In exchange for investing US$5 billion in the firm, Berkshire received preferred stock yielding 6 percent and warrants giving Berkshire the right to purchase BofA common stock at a steep discount. (The Oracle of Omaha exercised those warrants in 2017, netting a US$12 billion profit in the process.)

Warren Buffett let go of 2,2 million BAC shares in Q4 2019, but that represented a mere 0,2 percent reduction. And while he cut heavily into various bank holdings in 2020, he actually added to Berkshire’s already large position in Q3 of that year by snapping up more than 85 million shares.

The stake in BAC, worth nearly US$45 billion, accounts for 13,6 percent of the holding company’s total portfolio value. Meanwhile, Berkshire is Bank of America’s largest shareholder, at 12,3 percent of its shares outstanding.

3. American Express
American Express (AXP, US$192,35) continues to endure as one of Warren Buffett’s favourite investments.

Buffett likes to say this his preferred holding period is “forever”, and AmEx is one of the premier examples. Berkshire entered its initial stake in the credit card company in 1963, when a struggling AmEx badly needed capital.

Buffett obliged, getting favourable terms on his investment. He has played the role of white knight many times over the years, including during the 2008 financial crisis, as a means to get stakes in good companies at a discount. (Think: Goldman Sachs and Bank of America.)

No one would’ve been surprised if Buffett had trimmed his AXP position sometime during the course of 2020.

After all, Berkshire dumped financial stocks all year, and he even trimmed his stakes in payments processors during Q2.

American Express is both. And yet the position remained fully intact across the year.
Berkshire Hathaway, which owns 19,6 percent of American Express’ shares outstanding, is by far the company’s largest shareholder. No. 2 Vanguard owns 6,0 percent.

Buffett praised the power of AmEx’s brand at Berkshire’s 2019 annual meeting.
“It’s a fantastic story, and I’m glad we own 18 percent of it,” he said.

Of course he’s glad: A roughly 1,250 percent total return over the past quarter-century would make most investors glow.

4: Coca-Cola

Buffett, an unabashed fan of Cherry Coke, started investing in Coca-Cola (KO, US$60,68) stock soon after the stock market crash of 1987. In his 1988 letter to Berkshire shareholders, Buffett said he expected to hold on to the stock “for a long time”.

Three decades later, he has proven true to his word. Berkshire is KO’s largest shareholder with 9,3 percent of its shares outstanding, and Coca-Cola remains among the most iconic of Buffett stocks.
Coca-Cola made a brief appearance as a component of the Dow Jones Industrial Average in the 1930s. Shares were added back to the Dow in 1987, and they’ve remained a stalwart member ever since.

While Coca-Cola’s stock performance hasn’t impressed — its 141 percent total return over the past decade is well behind the S&P 500’s 299 percent return — it has been an income investor’s dream. The beverage maker has increased its dividend annually for 59 years and is expected to announce No. 60 soon.

5: Kraft Heinz

Warren Buffett was one of the driving forces behind the 2015 merger of packaged-food giant Kraft and ketchup purveyor Heinz to create Kraft Heinz (KHC, US$34,59). It’s Berkshire’s fifth-largest stock investment with a market value of nearly US$12 billion.

But it has been a dog, and Buffett likely still regrets his participation in what was one of his biggest deals of the past decade.

Berkshire Hathaway recorded a US$3 billion non-cash loss from an impairment of intangible assets in 2018, “arising almost entirely from our equity interest in Kraft Heinz”, Buffett wrote in his 2019 letter to shareholders.

In early 2019, KHC wrote down the value of its brands by nearly US$15 billion.
In 2020, Fitch downgraded the company’s debt to junk status. Its second-quarter earnings beat expectations, but Kraft still had to record yet another US$2,9 billion in impairments.
Kraft’s operational performance has at least improved since then, but its shares have gone back to lagging the broader market.

KHC still has a lot of catching-up to do to shed its “dud” status in the Berkshire Hathaway equity portfolio.

“I was wrong (about KHC),” Buffett flatly admitted on CNBC in 2019.
Buffett says he overpaid, and it’s difficult to disagree. Even including dividends, Kraft’s shares are still down 35 percent since September 30, 2015.

Berkshire Hathaway remains the company’s second-largest shareholder with a 26,6 percent stake.
Private investment firm 3G Capital — who teamed up with Berkshire in 2013 to purchase H.J. Heinz — is tops at 44,2 percent. — kiplinger.com

Share This:

Sponsored Links

Survey


We value your opinion! Take a moment to complete our survey

This will close in 20 seconds