Warren Buffett's Portfolio: A Guide To Investing Like Him

Warren Buffett is widely considered to be one of the most successful investors in history, with a long track record of picking winning stocks. His company, Berkshire Hathaway, publicly discloses its top stock holdings quarterly, allowing investors to emulate his investment strategy. While Berkshire Hathaway's portfolio is actively managed, investors can only see which stocks Buffett has been buying and selling once per quarter when the company files Form 13F with the SEC. This article will provide an overview of Buffett's investment strategy and discuss some of the recent changes to his portfolio.

Apple (AAPL)

Berkshire Hathaway first invested in Apple in Q1 2016. Since then, Buffett has bought Apple shares thirteen more times and sold shares on eleven occasions. The total stake has cost Berkshire Hathaway $15.9 billion, netting the investor a gain of 462% so far.

Apple's stock has been a strong performer, returning 48% in 2023. At its peak, Apple constituted 50% of Berkshire's equity portfolio. However, Buffett has been trimming his position in Apple recently, with the company selling about 10 million shares (1% of its stake) in Q4 2023, and another 116 million shares (13% of its stake) in Q1 2024. Buffett has indicated that these sales were primarily for tax reasons, as he anticipates higher capital gains taxes in the future.

Despite the recent sales, Apple remains a significant component of Buffett's portfolio. As of Q1 2024, Berkshire Hathaway held around 790 million shares of Apple, representing about 31.48% of their stock portfolio. Buffett has also praised Apple, saying it was "extremely likely" that Apple will remain Berkshire's largest holding at the end of 2024.

Bank of America (BAC)

Bank of America (BoFA) is one of the top stocks in Berkshire Hathaway's portfolio by number of shares. As of October 15, 2024, Berkshire Hathaway's stake in Bank of America is worth $32.4 billion, making it the investor's third-largest holding. This represents 11.42% of their entire equity portfolio.

Warren Buffett first invested in Bank of America in Q2 2007. Since then, he has bought shares twelve more times and sold shares on twenty occasions. The total stake has cost Buffett $20.1 billion, netting the investor a gain of 61% so far.

In 2011, Buffett made one of the most lucrative deals of his career by investing $5 billion in Bank of America during the US debt-ceiling crisis. He struck a deal with Bank of America's CEO, Brian Moynihan, for Berkshire Hathaway to invest $5 billion in cash in return for $5 billion worth of preferred shares, which were redeemable at a 5% premium and paid a 6% annual dividend. Berkshire also received stock warrants granting it the right to buy 700 million of the bank's common shares at $7.14 per share over the next decade.

Buffett's rationale for the deal was that, despite past mistakes, Bank of America was a strong underlying business that would endure, and that Berkshire's warrants would be of great value before they expired. Indeed, by the end of 2017, the common shares that Berkshire received were worth over $20 billion, more than tripling their money on paper. Berkshire's position has since been boosted to north of 1 billion shares, valued at around $35 billion today.

However, in 2024, Berkshire Hathaway has been selling off Bank of America shares, with more than $7 billion worth of stock sold since mid-July. Despite this, Bank of America's CEO, Brian Moynihan, has praised Buffett as "a great shareholder," and the bank has been buying a portion of the stock that Buffett has sold.

American Express (AXP)

Warren Buffett's first trade in American Express dates back to Q4 1998. Since then, he has bought shares nine more times and sold shares on eight occasions. The total stake has cost him $8.42 billion, resulting in a gain of 398% so far.

One of Warren Buffett's most successful early trades was with American Express in 1962. He took advantage of the company's distressed share price following the Salad Oil Scandal, which involved a fraudster named Tino De Angelis. De Angelis filled tanks with water and a thin layer of salad oil, which was certified by American Express's field warehousing company. When the scam was exposed in 1962, several companies went bankrupt, and American Express was left with significant liabilities. Despite the issues, Buffett recognised the value in the company's credit card and travellers' cheques business, which remained untarnished by the scandal. He was able to buy 5% of the company for $20 million, valuing the entire business at $150 million, which was far below its true worth. This trade showcased Buffett's ability to identify undervalued companies with strong fundamentals and capable management.

Coca-Cola (KO)

Coca-Cola has been described as a "dominant company in the beverage industry". As of 2024, it sells more than 200 brands of beverages, from Costa Coffee to vitaminwater, in over 200 countries. The company's iconic name and global reach have created a "moat" around its core soft drink product, protecting it from competitors.

Buffett's investment in Coca-Cola has been a successful one. By the end of 2020, his continuing investments in the company had returned 1,550%, excluding dividends. As of 2024, Berkshire Hathaway owned a 9.3% stake in Coca-Cola, worth more than $27.6 billion, making it the company's largest single shareholder.

Coca-Cola has stood out among the other positions in Buffett's portfolio due to the amount of money he has invested and its longevity. It is a cornerstone of his holdings and a key component of his reputation as a long-term investor. Buffett has described his favourite holding period as "forever", and he has certainly demonstrated this with his commitment to Coca-Cola.

Chevron (CVX)

Chevron Corporation (CVX) is one of the stocks in Warren Buffett's portfolio that offers exposure to the energy sector. As an integrated energy firm, Chevron is involved in all aspects of the energy industry, including oil and natural gas exploration and production (upstream), transportation of energy (midstream), and the processing of chemicals and refining (downstream).

Chevron is currently worth $17.7 billion to Warren Buffett, making up 6.22% of his entire equity portfolio. It is the fifth-largest holding in his portfolio. Buffett first invested in Chevron in Q4 2020, and since then, he has bought shares six times and sold shares on eight occasions. The average closing price of Chevron stock is $159.46, with a price range of $152.57 - $166.33.

Chevron has one of the lowest debt-to-equity ratios at 0.15, and its balance sheet is strong enough to weather any energy industry cycle while continuing to reward investors with dividends. Notably, Chevron has increased its dividend for 37 consecutive years, an impressive feat in the competitive energy industry.

Warren Buffett has defended his stake in Chevron amidst environmental concerns, stating that the company "has benefitted societies in all kinds of ways." He has left decisions about corporate responsibility to the company's operating businesses, including household names like Kraft Heinz (KHC) and GEICO Auto Insurance.

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