These 10 stocks represent 85% of Warren Buffett’s portfolio

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If you’ve ever wondered why Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett’s name is talked about so much on Wall Street, it’s because of his impressive investment track record. Buffett is not foolproof, but he has generated an average annual return of 20% since the mid-1960s for his shareholders. In total, we are talking about a return of more than 2,800,000%!

What is even more astonishing is that Buffett did nothing that average investors cannot do to realize these huge gains. He focuses on a few sectors and industries that interest him, buys companies with obvious competitive advantages and above all clings to these issues for a very long time.

Another source of Buffett’s success is focus. The Oracle of Omaha doesn’t think diversification is necessary if you know what you’re doing. This is clear from Berkshire Hathaway’s $ 302.6 billion investment portfolio. Over the past weekend, 85% of Berkshire’s invested assets ($ 257.3 billion) were tied to just 10 stocks.

Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.

1. Apple: $ 115.6 billion

kingpin of technology Apple (NASDAQ: AAPL) alone accounts for about 38% of Warren Buffett’s portfolio and has been dubbed “Berkshire’s third company” by the Oracle of Omaha. Apple offers one of the strongest brands in the world, is the clear leader in smartphones in the United States, and has turned to higher margin services under the leadership of CEO Tim Cook. While iPhone sales remain Apple’s flagship product, services becoming a larger percentage of total sales will help eliminate the flat-rate revenue associated with new product launches.

2. Bank of America: $ 43.2 billion

Bank stocks have long been Buffett’s favorite place to make Berkshire money work. Bank of America (NYSE: BAC) is Berkshire’s largest undisputed banking holding company, with over 14% of invested assets. Bank of America has done a great job of controlling its non-interest spending by consolidating its branches and focusing on digital banking. It should also benefit more than any other central bank from a possible rise in interest rates.

A person holding an American Express gold business credit card.

Image source: American Express.

3. American Express: $ 24.9 billion

Payment processor and lender American Express (NYSE: AXP) is the third largest and the third oldest share held by Buffett. After 28 years of holding AmEx, Berkshire Hathaway’s position has grown to nearly $ 25 billion. It is a cyclical business that benefits from long periods of economic expansion, as well as its ability to attract affluent customers. These affluent customers are less likely to change their spending habits when economic problems arise, which often means less worry about bad credit for AmEx.

4. Coca-Cola: $ 22.5 billion

Speaking of long-held possessions, the beverage giant Coca Cola (NYSE: KO) is the oldest stock in Buffett’s portfolio (33 years). Coca-Cola is present in all but two countries of the world (North Korea and Cuba) and has more than 20 brands generating at least $ 1 billion in annual sales. Thanks to its first-rate marketing team, it is also the most well-known consumer goods brand. Coke has ties to the holidays, has allied with well-known brand ambassadors, and is embracing digital advertising and social media as a way to get its message out to a younger generation.

A bowl of mac and cheese.

Image source: Getty Images.

5. Kraft Heinz: $ 14.1 billion

There is little doubt that Kraft Heinz (NASDAQ: KHC) That’s because Buffett admits Heinz overpaid for Kraft Foods and the combined company has significantly underperformed in recent years. This includes goodwill write-down of over $ 15 billion in 2019. While the pandemic has helped boost demand for packaged food, Kraft Heinz’s balance sheet is still bogged down by debt levels. and high goodwill. In short, Berkshire Hathaway is kind of stuck with its 325.6 million shares.

6. Verizon Communications: $ 9.1 billion

Telecommunications giant Verizon (NYSE: VZ) is a fairly recent addition to Berkshire Hathaway’s portfolio, although it has been bought hand in hand over the previous two quarters by Buffett and his team. Probably the appeal of Verizon is its 4.4% dividend yield, which is arguably one of the safest high-yield payments on the planet. Additionally, Verizon stands to benefit tremendously from the rollout of 5G infrastructure. It’s been a decade since the last major download speed upgrade, suggesting that a multi-year tech upgrade cycle will result in higher margin data consumption.

A bank manager shaking hands with potential customers.

Image source: Getty Images.

7. US Bancorp: $ 8.7 billion

Next to BofA, US Bancorp (NYSE: USB) is Buffett’s favorite banking stock. It’s a company that regularly trades at a premium over its book value – and for good reason. US Bancorp has seen its users embrace the technology, as the percentage of consumer loans taken out digitally has skyrocketed in the past two years. Being able to consolidate its physical branches, while avoiding the riskier derivative investments that have put US monetary central banks in trouble, has helped US Bancorp achieve one of the highest returns on assets among the big banks.

8. Moody’s: $ 8.5 billion

Credit agency and analysis company Moody’s (NYSE: MCO) is yet another top 10 title held for over two decades. With an initial base cost of just over $ 10, Berkshire Hathaway is sitting on an unrealized gain of over 3,300% – and that doesn’t factor in dividends. Historically low lending rates have occupied Moody’s credit rating segment, while volatile business markets are driving demand for Moody’s analysis. It’s hard to imagine Buffett ever selling this stake.

An electric vehicle plugged into a charging station.

Image source: Getty Images.

9. BYD: $ 6.2 billion

In 2008, Buffett acquired 225 million shares of the Chinese manufacturer of electric vehicles (EVs) BYD (OTC: BYDDY) for $ 1.03 a share (it closed last week at $ 27.65 a share). In March, BYD sold 16,301 electric vehicles, which is more than leading competitors NIO and XPeng delivered on a combined basis in the same month. While the Society of Automotive Engineers of China predicts that half of all new vehicle sales in 2035 will be powered by alternative energy, BYD is in pole position to disrupt the world’s largest auto market.

10. DaVita: $ 4.4 billion

Kidney Dialysis Services Company Completes Top 10 DaVita (NYSE: DVA). Buffett’s fascination with the business is probably a numbers game. Over time, an aging US population will become more dependent on kidney dialysis services for maintenance. As the clear leader in the provision of these services, DaVita is expected to experience a steady increase in demand and reimbursement for its services. This long-term patient thesis perfectly embodies Buffett’s investment philosophy.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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