Warren Buffett - Berkshire Hathaway Portfolio

Warren Buffett - Berkshire Hathaway Q4 2023 Portfolio

Berkshire Hathaway, a hedge fund managed by Warren Buffett, disclosed 41 security holdings in their SEC 13F filing for the fourth quarter of 2023, with a total portfolio value $347,358,074,000

 

Top 10 Holdings

 

Apple Inc. (AAPL)

 

Comprising a substantial 50.19% of the portfolio, Apple is Buffett’s largest holding. Despite a slight reduction of 1.09% in shares, the value of $174 billion suggests confidence in Apple’s continued innovation and market dominance. The current price shows a minor dip from the reported price, which might indicate a buying opportunity rather than a loss of faith.

 

Bank of America Corp. (BAC)

 

This represents 10.01% of the portfolio. Banking institutions like BAC could be seen as beneficiaries of rising interest rates, and Buffett traditionally favors financials for their cash flow and dividends.

 

American Express (AXP)

 

Holding 8.18% of the portfolio, American Express has performed well, with its current price appreciating by 12.6% from the reported price. This suggests Buffett’s bet on consumer spending and financial services is paying off.

 

Coca-Cola Co. (KO)

 

At 6.79%, Coca-Cola has been a long-term holding for Buffett, exemplifying his strategy of investing in companies with strong brand loyalty and a global consumer base.

 

Chevron Corp. (CVX)

 

Chevron occupies 5.41% of the portfolio, with Buffett having increased his stake by 14.37%. This could reflect a strategic play on energy prices and the stability of commodities.

 

Occidental Petroleum (OXY)

 

Representing 4.19% and increased by 8.74%, Occidental’s inclusion may be due to its attractive valuation, dividend yield, and potential growth in the energy sector.

 

Kraft Heinz Co. (KHC)

 

Holding 3.47%, Kraft Heinz aligns with Buffett’s preference for established brands with pricing power and a strong consumer base.

 

Moody’s Corp. (MCO)

 

At 2.77%, Moody’s is a leading credit rating agency that may offer stability and growth potential, despite the current price being lower than the reported price.

DaVita HealthCare Partners (DVA)

 

DaVita, occupying 1.09%, is a healthcare services company specializing in kidney care services. The current price shows a significant increase, which might reflect the company’s strong performance and Buffett’s confidence in the healthcare sector.

 

Citigroup Inc. (C)

 

Citigroup makes up 0.82% of the portfolio. Similar to BAC, this investment could be a play on the financial sector’s recovery and growth.

 

Analysis of Top Holdings:

 

Buffett’s top holdings indicate a balanced mix of technology, financial services, consumer goods, and energy sectors. His investment decisions are often based on the long-term value and fundamentals of businesses rather than short-term market fluctuations. The investments in Apple and Bank of America are particularly noteworthy for their sheer size, demonstrating a high conviction in these companies.

 

Other Notable Holdings:

 

Verisign Inc. (VRSN), Kroger Co. (KR), Visa Inc. (V), and Mastercard Inc. (MA) are consistent with Buffett’s preference for companies with durable competitive advantages and strong market positions.

 

Reductions in Paramount Global (PARA) and HP Inc. (HPQ) might suggest a strategy shift or valuation concerns.

 

The addition of Sirius XM Holdings Inc. (SIRI) by 315.60% is a significant move, pointing towards a positive outlook on the satellite radio company.

 

Portfolio Insights:

 

Warren Buffett’s portfolio remains heavily weighted towards a few key holdings, reflecting his investment philosophy of concentration and conviction in high-quality companies. Despite market volatility, the portfolio shows a blend of steady performers and strategic growth bets, underpinned by a long-term investment horizon.

Who is Warren Buffett ?

1930:

Warren Buffett was born in Omaha, Nebraska.

1942:

Buffett buys his first stock, Cities Service Preferred, at age 11.

1951:

Buffett graduates from Woodrow Wilson High School in Omaha.

1952:

Buffett enrolls at the University of Pennsylvania, where he studies economics and finance.

1954:

Buffett transfers to Columbia University, where he studies under Benjamin Graham, the father of value investing.

1956:

Buffett graduates from Columbia University and takes a job as a securities analyst at Graham-Newman Corp.

1957:

Buffett marries Susan Thompson.

1962:

Buffett leaves Graham-Newman Corp. to start his own investment partnership, Buffett Partnership, Ltd.

1965:

Buffett buys a controlling interest in Berkshire Hathaway, a textile company.

1967:

Buffett begins to transition Berkshire Hathaway from a textile company to an investment company.

1970:

Buffett Partnership, Ltd. is liquidated.

1972:

Buffett becomes the chairman and CEO of Berkshire Hathaway.

1973:

Berkshire Hathaway’s stock price falls by 50% during the stock market crash.

1980:

Berkshire Hathaway’s stock price begins to recover.

1985:

Buffett buys See’s Candies.

1987:

Berkshire Hathaway survives the Black Monday stock market crash relatively unscathed.

1990:

Buffett buys Geico.

1996:

Buffett buys American Express.

1999:

Buffett is named “Investor of the Century” by Time magazine.

2006:

Buffett buys The Buffalo News.

2008:

Buffett survives the financial crisis.

2011:

Buffett donates $31 billion to the Bill & Melinda Gates Foundation.

2012:

Buffett is awarded the Presidential Medal of Freedom.

2019:

Buffett becomes the third-wealthiest person in the world.

2020:

Buffett’s net worth falls by $24 billion during the COVID-19 pandemic.

2021:

Buffett’s net worth recovers and he becomes the fourth-wealthiest person in the world.

2022:

Buffett turns 92 years old.

Interesting Facts:

Buffett has a net worth of 114.1 billion USD as of 2023, making him one of the richest people in the world.

Buffett bought his first stock when he was just 11 years old.

He is known as the “Oracle of Omaha.”

Buffett is widely considered one of the greatest investors of all time.

He is also a noted philanthropist, having pledged to give away 99% of his wealth to charitable causes.

He is also a fan of playing bridge, and has been known to play the game for hours on end.

Buffett is a longtime friend of Microsoft co-founder Bill Gates, and the two have worked together on several philanthropic initiatives.

Is Apple Inc. (AAPL) a Buffett-Type-Investment?

Economic Moat

 

Apple has one of the most recognized and valuable brands in the world, with a loyal customer base and a reputation for quality and innovation. The integrated ecosystem of Apple’s products and services encourages customer retention and repeat sales. Apple’s gross margin of 45.03% suggests strong pricing power, which is a characteristic Buffett looks for.

 

Financial Health

 

Apple’s net income of $100.91 billion with a profit margin of 26.16% indicates a highly profitable company. The current ratio is slightly above 1, suggesting adequate short-term liquidity. A debt-to-equity ratio of 1.46 indicates higher leverage, which Buffett typically scrutinizes, but given Apple’s cash flow strength, this may not be a significant concern. A substantial free cash flow of $106.87 billion provides Apple with plenty of capital to reinvest in the business, pay dividends, and buy back shares.

 

Management Efficiency

 

An ROE of 156% is exceptionally high, which may be influenced by Apple’s stock repurchases reducing equity. Buffett values high ROE but would also consider the context of how it’s achieved. Apple has a high inventory turnover rate of 31.81, reflecting efficient management and strong demand for its products.

 

Valuation

 

The trailing PE ratio of 28.95 and a forward PE of 27.75 show Apple’s stock is priced at a premium relative to its earnings. While Buffett prefers a lower PE ratio, he may be willing to pay for quality. At 2.22, the PEG ratio suggests the stock may be overvalued based on expected growth rates, although this is within the range Buffett might accept for a high-quality business.

Price to Book PB Ratio is very high at 38.78, which may give value investors pause.

 

Dividends and Share Repurchases

 

A yield of 0.52% is relatively low, but the payout ratio of 14.95% is sustainable. Buffett appreciates a track record of dividend growth, which Apple has. The reduction in shares outstanding (-2.38% YoY) reflects Apple’s aggressive share buyback policy, effectively returning value to shareholders.

 

 

Market Performance

 

The stock price increase of 23.23% over the last year reflects strong market confidence in Apple. A beta of 1.29 suggests that Apple’s stock is somewhat more volatile than the market. Beta measures the price volatility of a stock in comparison to the overall stock market. A value higher than 1 indicates greater volatility, while a value under 1 indicates less volatility.

 

In Conclusion


Apple showcases a robust economic moat, exceptional profitability, strong management efficiency, and a solid track record of returning value to shareholders. Despite its high valuation, which may not traditionally align with Buffett’s preference for undervalued stocks, Apple’s consistent performance, and strong competitive position may justify a premium. Buffett’s investment in Apple in the past indicates that he sees value beyond the traditional metrics. Apple could be viewed as a “Buffett-type” investment, especially for the long-term, considering its enduring brand strength, financial health, and efficient capital deployment.

Berkshire Hathaway, a hedge fund managed by Warren Buffett, disclosed 45 security holdings in their SEC 13F filing for the third quarter of 2023, with a total portfolio value $313,257,311,000

 

Warren Buffett - Berkshire Hathaway Q3 2023 Portfolio

Top 7 Holdings

As of September 30, 2023, Warren Buffett’s Berkshire Hathaway top 7 holdings were:

 

1.             Apple Inc. (AAPL)

2.             Bank of America Corp. (BAC)

3.             American Express (AXP)

4.             Coca Cola Co. (KO)

5.             Chevron Corp. (CVX)

6.             Occidental Petroleum (OXY)

7.             Kraft Heinz Co. (KHC)

 

To understand why Warren Buffett may have chosen these investments, let’s delve into each company:

 

Apple Inc. (AAPL) – Comprising a substantial 50.04% of the portfolio, Apple is a dominant force in the technology sector known for its innovative products and services, strong brand loyalty, and robust financial health. This heavy weighting reflects confidence in Apple’s continued growth and profitability.

 

Bank of America Corp. (BAC) – Holding 9.03% of the portfolio, Bank of America is one of the largest banks in the United States. The investment may be driven by its large scale, diversified financial services, and its ability to generate stable earnings.

American Express (AXP) – With 7.22% of the portfolio, American Express is a global services company, known for its credit card and travel services. Buffett may value its strong brand, affluent customer base, and earning potential from finance charges and fees.

 

Coca Cola Co. (KO) – Representing 7.15% of the portfolio, Coca-Cola is a leading beverage company with a vast portfolio of products and a strong global distribution network. Its consistent dividend payments and brand recognition make it a quintessential Buffett investment.

 

Chevron Corp. (CVX) – Chevron, holding 5.93% of the portfolio, is a multinational energy corporation. Despite a recent reduction of 10.45%, the investment suggests confidence in the company’s long-term value, its ability to manage through cyclical commodity prices, and its dividend yield.

 

Occidental Petroleum (OXY) – At 4.64%, Occidental Petroleum is another investment in the energy sector. The investment may be due to the company’s assets in lucrative oil fields and its potential for growth as energy markets recover.

 

Kraft Heinz Co. (KHC) – With 3.5% of the portfolio, Kraft Heinz is one of the largest food and beverage companies. The stake might be based on its portfolio of well-known brands, potential for operational improvements, and cost-cutting opportunities.

 

 

Buffett is known for his value investing philosophy, focusing on companies with strong fundamentals, a competitive advantage, and the ability to generate cash. His investments tend to be in companies that are leaders in their respective industries, have a history of profitability, and often pay dividends. It’s also noteworthy that Buffett prefers companies with understandable business models, which is reflected in this portfolio snapshot.

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