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Warren Buffett Stocks: Introducing the Stock Warren Buffett Has Been Investing in Consistently for Over 5 Years
Warren Buffett Stocks, the esteemed CEO of Berkshire Hathaway, has consistently impressed Wall Street with his exceptional investment skills for almost sixty years. Since taking on the role of CEO in the mid-1960s, he has earned a remarkable aggregate return of over 4,450,000% on the company’s Class A Shares (BRK.A) as of January 12, a testament to his remarkable acumen.
Buffett has a remarkable ability to identify and invest in long-term winners, which has garnered the attention and anticipation of investors from all walks of life. They eagerly await news of his latest investment moves, as they know that his decisions often hold significant weight in the market. Interestingly, the stock that Buffett most frequently purchases is not necessarily the one that immediately comes to mind.
Buffett and his team have been consistently adding to a select group of well-known stocks
Investors who are curious about Berkshire Hathaway’s investment activities will be pleased to know that the company is required to file Form 13F with the Securities and Exchange Commission within 45 days after the end of each quarter. This filing provides a detailed look at the stocks that were bought and sold by some of the brightest minds on Wall Street during the previous quarter. It is mandatory for individuals and entities with assets under management totaling at least $100 million.
As of January 12, Berkshire Hathaway’s investment portfolio consisted of approximately 50 stocks, with a total value of $361 billion. Over the past few years, Buffett and his team have been consistently adding to some of these stocks.
One notable example is Occidental Petroleum (NYSE: OXY), an energy stock that has become a core holding for Berkshire Hathaway. Buffett, along with his investing lieutenants Todd Combs and Ted Weschler, have been closely focused on this stock for the past two years.
At the beginning of 2022, Berkshire Hathaway held $10 billion worth of Occidental preferred stock, which yielded an annual return of 8%. However, they did not own any common shares. Fast forward to the present, and Buffett’s company now owns slightly over 243.7 million shares of Occidental Petroleum common stock, representing a stake worth more than $14.1 billion.
The reason behind Buffett and his team’s frequent purchases of Occidental shares over the past two years likely stems from their expectation that the spot price of crude oil will remain high or potentially increase further. The combination of limited capital investment by global energy giants during the pandemic and the uncertainty surrounding Russia’s conflict with Ukraine has resulted in a tight global supply of crude oil. In such situations, it is not uncommon for the spot price of a key commodity to rise when its supply is constrained.
Occidental Petroleum stands out from other integrated oil and gas operators due to its significant reliance on revenue generated from its upstream operations, specifically drilling. This means that if the price of crude oil increases, Occidental will experience a disproportionately positive impact. Conversely, a decline in the spot price of crude oil would have the opposite effect.
Warren Buffett has openly expressed his confidence in tech giant Apple (NASDAQ: AAPL) by steadily increasing his company’s stake in the company. Since Berkshire’s initial investment in Apple in the first quarter of 2016, their holdings have grown to nearly 915.6 million shares, representing 47.1% ($170.2 billion) of their invested assets.
Buffett’s high regard for Apple was evident during Berkshire’s 2023 annual shareholder meeting when he referred to it as “a better business than any we own.” This statement, coupled with the consistent growth of their position, indicates that Buffett and his team have been strategically building their investment in Apple over the years. Apple’s strong brand presence and commitment to innovation set it apart from its competitors.
Apple’s dominance in the U.S. smartphone market for more than a decade is a testament to its success. The introduction of a 5G-capable iPhone in late 2020 further solidified its position, consistently capturing over half of the U.S. smartphone market share.
Furthermore, Apple is expanding its focus to become a platforms company. By prioritizing subscription services, the company aims to enhance long-term profitability, mitigate sales fluctuations during major iPhone upgrade cycles, and foster customer loyalty within its ecosystem of products and services.
Apple’s capital-return program is also noteworthy. The company returns $15 billion in dividends to its shareholders annually and has repurchased over $600 billion of its common stock since initiating its buyback program in 2013.
Warren Buffett has been consistently purchasing shares of this particular stock on a monthly basis for over five years
Berkshire Hathaway’s 13F report provides valuable insights into the stocks, industries, and trends that catch the attention of Warren Buffett and his team. However, it does not reveal the complete picture when it comes to Buffett’s preferred stock to buy.
While Berkshire’s portfolio includes a few core holdings that have been frequently purchased in recent years, there is another stock that Warren Buffett has been buying almost every month since July 2018. Interestingly, this stock is not listed in Berkshire’s quarterly reports because it is none other than Berkshire Hathaway itself.
In mid-2018, Berkshire Hathaway implemented a share repurchase program that required the company’s stock to trade at or below 120% of its book value for buybacks to occur. Prior to July 2018, the stock had never reached this threshold, resulting in no repurchases being made.
However, everything changed on July 17, 2018, when the company’s board introduced new measures that granted Warren Buffett and his late partner Charlie Munger more flexibility in initiating buybacks. As long as Berkshire Hathaway maintained a minimum of $30 billion in cash, cash equivalents, and Treasuries on its balance sheet, and Buffett and Munger believed that the stock was undervalued, repurchases could be conducted without any limitations.
Berkshire Hathaway’s recent change in policy regarding share buybacks has been significant. Although the company has not yet reported its fourth-quarter results, I can provide figures up until September 30, 2023. It is worth noting that Warren Buffett and Charlie Munger have approved share buybacks in all 21 quarters since this change was implemented. Over the past five-plus years, there have been only a few months where share repurchases did not occur. In total, Buffett and Munger have overseen the repurchase of over $72 billion worth of Berkshire Hathaway stock since mid-2018.
Share buybacks serve as a direct method for Buffett and his team to reward long-term shareholders, especially since Berkshire does not pay dividends. By regularly buying back stock, the ownership stakes of loyal shareholders can steadily increase.
Moreover, companies with consistent or growing net income, such as Berkshire Hathaway (excluding unrealized investment gains and losses), can expect their earnings per share to rise as the number of outstanding shares decreases. This factor further enhances the attractiveness of Berkshire’s stock for investors who prioritize fundamental analysis.
Looking ahead to 2024, there is no doubt that Warren Buffett will continue to prioritize purchasing shares of his own company.
