Four times a year, holding companies of a certain size are required to divulge their positions in equities. That’s a great thing for followers of Warren Buffett, widely considered the greatest long-term investor of all time. His company, Berkshire Hathaway (ticker: BRK.B, BRK.A), which he still helms at the ripe old age of 90, owns a sprawling equities portfolio that directly reflects what stocks Buffett likes.
Although investors don’t have an up-to-the-minute reflection of what Berkshire owns, the company’s mid-May 13F filing with the U.S. Securities and Exchange Commission reveals the complete Berkshire Hathaway portfolio as it stood at the end of March.
Why Follow Berkshire Hathaway Stock Picks?
There’s a reason Berkshire Hathaway’s annual shareholder meeting is considered such a Wall Street occasion. Before the pandemic, upward of 40,000 people would flock to the humble town of Omaha, Nebraska, just to hear sage wisdom from the elderly duo of Buffett and Berkshire Vice Chairman Charlie Munger, now 97.
Part of the reason is that the two share an easy rapport with one another, and each is witty and entertaining in their own way. But tens of thousands of people weren’t making the trek to Nebraska to see an Abbott and Costello routine.
People closely watch the Berkshire Hathaway portfolio for a simple reason: The long-term track record of Berkshire Hathaway is absolutely unparalleled. In the 55 full years between 1965 and 2020, Berkshire Hathaway stock compounded at a 20% annualized rate compared with a 10.2% annualized return for the S&P 500. To illustrate the power of compounding, that amounted to a 2,810,526% return for Berkshire shareholders compared with a 23,454% return for investors in the S&P 500.
For every $10,000 invested in Berkshire back in 1965, investors would have $281.06 million by the end of 2020. S&P 500 investors would have $2.36 million. Returns like that simply can’t be generated by a lucky hand.
What Stocks Is Berkshire Buying and Selling?
Buffett’s extreme long-term bias is part of what makes him an excellent investor — it’s an edge few other investors have the patience or temperament for. When Berkshire agreed in 2015 to make its largest-ever acquisition, paying $32.1 billion for total ownership of industrial giant Precision Castparts Corp., he brushed off concerns over a bear market in energy prices as myopic, telling CNBC, “we’re going to be in this business for 100 years. …”
Another famous nugget of wisdom from Buffett is his quip that his favorite holding period is “forever.”
All that’s to say that when Berkshire makes changes to its portfolio, it tends to carry weight.
There was only one new addition to Berkshire Hathaway’s stock holdings in the first quarter:
Aon PLC (AON). This Dublin-based insurance broker was the only new addition to Berkshire’s portfolio last quarter, and despite the stake being worth about $1 billion, it was a relatively timid purchase by Berkshire’s standards. Berkshire Hathaway has more than $145 billion in cash on hand.
When it comes to sales, however, the financial holding company was a bit more active. Here are the five stock holdings Berkshire decreased by 25% or more in the first quarter:
Merck & Co. (MRK); sold 37% of its stake. It’s not exactly clear why the company decided to ditch a meaningful chunk of its investment in pharma giant Merck, especially since the company had actually been adding to its Merck position as recently as the fourth quarter of 2020.
Axalta Coating Systems (AXTA); sold 40% of its stake. While slashing its stake in specialty chemicals company Axalta Coating Systems sounds like a major move, it shouldn’t be taken out of context. AXTA only makes up about 0.2% of the larger portfolio, so it’s simply not going to move the needle much. This may simply be part of a longer-term exit strategy; selling all shares of the $7 billion company at once may have risked crashing the stock price.
Chevron Corp. (CVX); sold 51% of its stake. Last year, Berkshire famously made a total exit from airline stocks in an uncharacteristically ill-timed pivot out of an industry struggling with unique pandemic-related struggles. Perhaps it has learned from those mistakes, waiting for rebounding energy prices to sell more than half of its position in global oil major Chevron.
Liberty Global PLC Class A (LBTYA); sold 81% of its stake. Yes, selling 81% of communications and entertainment company Liberty Global sounds like a big move, but again, it made up less than 0.2% of Berkshire’s portfolio. Buffett and other high-level Berkshire investment managers must think there’s likely to be a better use for its capital. Don’t be surprised if this particular stock disappears from the portfolio in coming quarters.
Wells Fargo (WFC); sold 98% of its stake. The biggest sale both on a percentage basis and in terms of being newsworthy is the almost total liquidation of Wells Fargo, a longtime major holding of Berkshire. Buffett stuck with the bank in the wake of its fake accounts scandal, but the stock has underperformed for years in the wake of that mess. With recent increases in interest rates, WFC stock has rallied fiercely higher, and Berkshire seized the opportunity to sell. Expect a total liquidation in coming quarters.
Zooming Out: Characteristics of Berkshire Hathaway Holdings
Although Berkshire Hathaway’s stock portfolio, worth nearly $300 billion, is composed of 48 different positions, it’s not quite as diversified as you might expect for a grouping of four dozen stocks.
In fact, concentrated bets on companies Buffett’s highly confident in is a big part of what has made him such a fabulously successful investor over time. It’s harder to be concentrated with the massive sum of money Berkshire controls, but it’s doing a good job regardless: Its top 10 holdings make up more than 85% of Berkshire’s portfolio value. And its single largest position, Apple ( AAPL), makes up 40% of its portfolio.
In terms of sectors, the huge bet on Apple means information technology is the most heavily represented sector, constituting about 40% of the portfolio; financial companies accounted for 31% of the portfolio, while consumer staples were the last to crack double digits at 13%.
Here’s a look at the complete Berkshire Hathaway portfolio:
|AbbVie Inc (ABBV)||22,868,178||$ 2,655,452,829|
|Amazon.com, Inc. (AMZN)||533,300||$ 1,708,202,564|
|American Express Company (AXP)||151,610,700||$ 23,783,170,509|
|Aon PLC (AON)||4,096,146||$ 1,037,185,129|
|Apple Inc (AAPL)||907,559,761||$ 113,835,220,822|
|Axalta Coating Systems Ltd (AXTA)||13,887,037||$ 436,886,184|
|Bank of America Corp (BAC)||1,032,852,006||$ 43,792,925,054|
|Bank of New York Mellon Corp (BK)||74,346,864||$ 3,833,324,308|
|Biogen Inc (BIIB)||643,022||$ 182,097,400|
|Bristol-Myers Squibb Co (BMY)||31,032,227||$ 2,080,710,820|
|BYD Co. Ltd (BYDDF)||225,000,000||$ 4,855,500,000|
|Charter Communications Inc (CHTR)||5,213,461||$ 3,610,426,012|
|Chevron Corporation (CVX)||23,672,271||$ 2,464,756,857|
|Coca-Cola Co (KO)||400,000,000||$ 21,848,000,000|
|DaVita Inc (DVA)||36,095,570||$ 4,423,151,148|
|General Motors Company (GM)||67,000,000||$ 3,800,240,000|
|Globe Life Inc (GL)||6,353,727||$ 670,127,587|
|Itochu Corporation (ITOCF)||81,304,200||$ 2,444,817,294|
|Johnson & Johnson (JNJ)||327,100||$ 55,921,016|
|Kraft Heinz Co (KHC)||325,634,818||$ 14,370,264,518|
|Kroger Co (KR)||51,060,296||$ 1,868,296,231|
|Liberty Global PLC Class A (LBTYA)||3,359,831||$ 92,126,566|
|Liberty Global PLC Class C (LBTYK)||7,346,968||$ 201,159,984|
|Liberty Latin America Ltd Class A (LILA)||2,630,792||$ 36,199,698|
|Liberty Latin America Ltd Class C (LILAK)||1,284,020||$ 17,847,878|
|Liberty Sirius XM Group Series A (LSXMA)||14,860,360||$ 620,568,634|
|Liberty Sirius XM Group Series C (LSXMK)||43,208,291||$ 1,795,736,574|
|Marsh & McLennan Companies, Inc. (MMC)||5,287,526||$ 720,055,291|
|Mastercard Inc (MA)||4,564,756||$ 1,678,004,306|
|Merck & Co., Inc. (MRK)||17,882,388||$ 1,415,927,482|
|Mondelez International (MDLZ)||578,000||$ 36,622,080|
|Moody’s Corporation (MCO)||24,669,778||$ 8,113,396,589|
|Procter & Gamble Co (PG)||315,400||$ 43,525,200|
|Restoration Hardware Holdings, Inc (RH)||1,756,448||$ 1,064,284,537|
|Sirius XM Holdings Inc (SIRI)||43,658,800||$ 259,769,860|
|Snowflake Inc (SNOW)||6,125,376||$ 1,429,601,505|
|SPDR S&P 500 ETF Trust (SPY)||39,400||$ 16,348,636|
|StoneCo Ltd (STNE)||10,695,448||$ 672,636,725|
|Store Capital Corp (STOR)||24,415,168||$ 821,570,403|
|Teva Pharmaceutical Industries Ltd (TEVA)||42,789,295||$ 471,538,031|
|T-Mobile Us Inc (TMUS)||5,242,000||$ 713,174,100|
|United Parcel Service, Inc. (UPS)||59,400||$ 12,585,078|
|US Bancorp (USB)||147,315,527||$ 8,893,438,365|
|Vanguard 500 Index Fund ETF (VOO)||43,000||$ 16,403,210|
|Verisign, Inc. (VRSN)||12,815,613||$ 2,837,248,562|
|Verizon Communications Inc. (VZ)||158,824,575||$ 9,038,706,563|
|Visa Inc (V)||9,987,460||$ 2,264,856,304|
|Wells Fargo & Co (WFC)||675,054||$ 30,971,478|
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