Listen to the Oracle.
Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) CEO Warren Buffett is one of the most iconic investors in the world. Buffett has earned the nickname the “Oracle of Omaha” for his consistent stock-picking performance over the decades and his calm, optimistic demeanor through thick and thin in the markets. As of the end of 2017, Buffett was the fourth-wealthiest individual in the world, with a net worth of about $83.2 billion. Fortunately for investors who want to follow in Buffett’s value investing footsteps, Berkshire publicly discloses its stock holdings each quarter. Here are Warren Buffett’s eight favorite stocks.
Wells Fargo & Co. (WFC)
As of Buffett’s annual shareholder letter published on Feb. 24, Wells Fargo is Berkshire’s largest holding. Buffett reported holding 482.5 million shares of Wells Fargo worth about $29.2 billion, which Berkshire acquired at an average purchasing price of about $24.53 per share. However, Wells’ place at the top may not last for long. Buffett has repeatedly expressed interest in keeping Berkshire’s Wells Fargo stake below 10 percent ownership of the company. Berkshire would be subject to a higher level of regulatory scrutiny if it exceeds this big bank ownership threshold. Berkshire currently owns a 9.9 percent stake.
Apple, Inc. (AAPL)
Apple may not be Buffett’s top holding as of the shareholder letter, but he’s been consistently adding to his massive $29 billion stake in the iPhone maker in recent quarters. In fact, Buffett bought another 31.2 million shares in the fourth quarter of 2017. Berkshire now holds a total of 166.7 million shares, which represent 3.3 percent ownership of Apple. Berkshire reportedly paid an average price of about $125.73 for its Apple shares. Buffett has historically shied away from tech stocks, but he said last year he believes Apple will soon become the world’s first $1 trillion company.
Kraft Heinz Co (KHC)
Berkshire owns 325.4 million shares of Kraft Heinz, worth about $25.3 billion. Buffett paid an average price of about $30.11 per share. Berkshire first acquired an 8 percent stake in Kraft Foods in 2008. Berkshire and partner 3G Capital announced a $23 billion buyout of Heinz in February 2013. A little more than two years later, 3G and Buffett announced a merger between Kraft and Heinz, making Kraft Heinz the fifth-largest food company in the world at the time. Berkshire was initially the majority owner of Kraft Heinz, but its stake is now only about 26.7 percent.
Bank of America Corp. (BAC)
Berkshire currently holds 700 million shares of Bank of America stock worth about $20.6 billion. Buffett’s purchase of Bank of America shares was far from conventional. Buffett first invested $5 billion in Bank of America in 2011, when the bank was struggling with liquidity, and acquired preferred shares of BAC stock that could be converted to common shares at any time. When Buffett exercised his warrants in mid-2017, he acquired his Bank of America shares at an incredible price of about $7.15 each. Berkshire now owns 6.8 percent of the bank.
The Coca-Cola Co (KO)
Of all of Berkshire’s top holdings, Coca-Cola may be most representative of the long-term value investing philosophy that has made Buffett so much money throughout the years. Berkshire owns 400 million shares of Coca-Cola stock worth about $18.3 billion. Adjusted for stock splits, Berkshire paid an average price of about $3.24 per share for Coca-Cola. How was Buffett able to get such a good price for a stock that trades at more than $44 per share? Patience. Berkshire first bought shares of Coca-Cola in 1987. Today, Berkshire holds a 9.4 percent stake in the company.
American Express Company (AXP)
Berkshire owns 151.6 million shares of American Express stock worth about $15 billion. Buffett first took a stake in American Express in 1991, when he acquired convertible preferred shares of stock. Berkshire’s AXP stake represents about 17.6 percent ownership of the company, but Buffett could be looking to increase that stake in the near future. Last year, Berkshire petitioned the Federal Reserve to allow it to increase its stake in American Express to as high as 25 percent after the company’s share repurchase program drove Berkshire’s ownership stake higher than anticipated.
Phillips 66 (PSX)
Buffett has had a hit-or-miss history investing in the oil industry, but Phillips 66 has been one of the hits. Berkshire owns 74.5 million shares of Phillips 66 stock worth about $7.5 billion. Berkshire paid an average price of about $78.31 for the stock, which is currently trading above $91. Earlier this month, Berkshire announced it would be selling 35 million of its PSX shares back to the company. Buffett said he intends to put Berkshire’s ownership of the company, which currently stands at about 14.9 percent, back below a critical 10 percent threshold to avoid regulatory headaches.
U.S. Bancorp (USB)
Berkshire owns 103.8 million shares of U.S. Bancorp worth about $5.5 billion. Berkshire paid an average price of about $32.19 for its shares, which are now trading above $55. Buffett has always had a soft spot for the financial sector. In addition to Berkshire’s full ownership of insurance subsidiaries Geico, Berkshire Hathaway Reinsurance and General RE, seven of Berkshire’s top 15 public stock holdings are banks or financial services companies. U.S. Bancorp appears to have a bright future ahead considering the current climate of deregulation and rising interest rates. Berkshire holds a 6.3 percent ownership stake in the bank.
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Warren Buffett’s 8 Favorite Stocks originally appeared on usnews.com
