Warren Buffett is regarded as among the best investors of all time. His investing tips are an inspiration for not just beginners but for experienced investors as well. For more than five decades now, Buffett has been ruling Wall Street. One evidence of his greatness is that Berkshire Hathaway’s stock has averaged an annual gain of 20% between 1965 and 2020, compared to an annualized total return, including dividends, of 10.2% of benchmark S&P 500. Detailed below are the top ten picks of Warren Buffett.
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Top ten picks of Warren Buffett
One of Buffett’s investing philosophies is to invest in a handful of stocks where one has a high level of long-term conviction. That is why just five stocks account for about 70% of Buffett's (Berkshire Hathaway) invested assets. In this article, we have taken the top ten picks of Warren Buffett on the basis of the number of shares as of March 31. Following are the top ten picks of Warren Buffett:
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Kroger (51.1 million)
Buffett has been increasing his stake in Kroger for sometime now. It is estimated that Berkshire Hathaway has gained more than 20% on the investment so far. The grocery store chain is headquartered in Cincinnati.
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General Motors (67 million)
Berkshire first acquired General Motors share in 2012, and has since increased the stake slowly. Buffett raised the stake in GM at a time when the auto industry was going through a difficult phase. GM was also facing challenges at the time due to a United Auto Workers’ strike and weak Chinese demand. It is believed that Berkshire Hathaway gained about $1.5 billion through GM in less than four months.
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Bank of New York Mellon (72.4 million)
It is a commercial and investment bank that specializes in servicing rich people and international corporations. This bank has been a long time Buffett favorite, and one reason for this is because this bank doesn’t make loans to customers. Rather, a significant portion of its revenue comes from fees. So, it is more of a service company with a highly loyal customer base.
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U.S. Bancorp (129.7 million)
Berkshire sold about 1.45 million U.S. Bancorp stocks in the first quarter, as well as in small quantities a few times over the last year. U.S. Bancorp is Buffett’s favorite regional bank pick now because he sold his other regional bank holdings, including PNC Financial Services Group and M&T Bank, in the fourth quarter last year.
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American Express (151.6 million)
Berkshire Hathaway has been holding American Express for about 28 years now. Initially, Buffett acquired a stake in the financial services company in 1967. At the time, American Express required money to expand its operations. Since then, Buffett has saved the company many times, including during the 2008 financial crisis.
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Verizon (158.8 million)
Berkshire added Verizon in the fourth quarter of last year. Many were surprised to see Berkshire putting so much money in Verizon, a company operating in a very competitive market and with high capital expenditures. It is believed that Buffett went for this stock because he was unable to find other attractive places that could give a desired return. Verizon, with a dividend yield of around 4.6%, may have appeared attractive in comparison to other assets, such as Treasuries.
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Kraft Heinz (325.6 million)
In 2016, Berkshire Hathaway and 3G Capital acquired H.J. Heinz Company for $28 billion. In 2018, the company merged with Kraft to create a new entity, called the Kraft Heinz Company. The shares of the company plummeted from a high of $96.65 in February 2017 to around $20 in March last year. Buffett, however, continues to hold Kraft Heinz. At $13 billion, Kraft Heinz represents about 4.5% of Berkshire's total portfolio.
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Coca-Cola (400 million)
Buffett started investing in Coca-Cola in the 1980s following the 1987 stock market crash. Now, Berkshire Hathaway holds about $19.2 billion worth of Coca-Cola’s shares, accounting for about 8.6% of the total portfolio. The beverage company is estimated to hold 20% of the cold-beverage market in developed countries and about 10% in emerging markets. It is also among the most recognizable brands in the world.
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Apple (887.1 million)
This company is at the top of Berkshire's portfolio in terms of market value, of more than $108.36 billion at the end of March. Apple stock accounts for about 40% of Berkshire's total equity portfolio, compared to just 6% in 2016. The iPhone maker became Berkshire's top pick in 2018 after Buffett acquired more shares of the company in that year.
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Bank of America (1.01 billion)
Buffett has been a Bank of America common stockholder since the third quarter of 2017 after he converted preferred stock, bought in August 2011. At the time, Buffett acquired 50,000 shares of Bank of America (for about $5 billion) with a liquidation value of $100,000 per share. In dollar terms, Buffett held about $40 billion worth of BofA stock as of March 31. Berkshire Hathaway invested more than $2 billion in BofA stock in 2020.
