Taking investing strategies like billionaire investor Warren Buffett is everybody's dream. Buffett's Berkshire Hathaway Inc. BRK.B has added more than 130% over the last 10 years (as of February 16, 2017) that is way better than the gain of over 65% from the broader market ETF SPDR S&P 500 ETFSPY during the same timeframe.
The winning trend of Berkshire Hathaway is still alive as the entity tacked on about 12.5% in the last six months (as of February 16, 2017) compared with 7.6% returns offered by the key U.S. equity gauge S&P 500 index.
Notably, Berkshire Hathaway's 13F filing disclosing the fourth-quarter stock holdings has shown some major changes. Below we highlight those alterations in portfolios, so that retail investors can take cues from them and land up on some promising investing strategies via stocks and ETFs.
Warren Buffett's Berkshire Hathaway increased its stake in Delta Air Lines DAL by 848 % to 60 million shares valued at $2.95 billion and built a new position in Southwest Airlines LUV by buying its $2.2 billion of its shares. He also upped his stake in American Airlines AAL . Overall airline investment tailed to over $8 billion.
Buffett flagged the airlines industry as a 'death trap ' in 2013. However, tables seem to be turning now. The pure-play aviation ETF U.S. Global Jets ETF JETS gained about 26.8% in the last one year (as of February 16, 2017). The industry is in the top 26% of the Zacks Industry Rank at the time of writing, giving bullish signals to the entire industry (see all industrial ETFs here).
The industry has been striving to remain profitable. In the latest earnings reporting cycle, many companies came up with an earnings beat. Most of the airlines are restraining capacity growth which should improve unit revenues (read: Will Airline ETF Surge on Earnings or Dive on Trump? ).
Following the news of Buffett's increased attention toward airlines stocks, LUV added about 3.6% on February 15, DAL was up over 2.6% and AAL advanced about 2.1% on the same day.
Invest in Apple ETFs
Berkshire boosted its ownership in Apple by 277%, purchasing 42.1 million shares worth $6.64 billion. In any case, Apple shares touched an all-time high. A blockbuster fiscal first-quarter earnings report and optimism around the to-be released new iPhone 8 have been pushing up the price.
Earnings per share of Apple came in at $3.36, breezing past the Zacks Consensus Estimate of $3.22 and improving 2.4% from year-ago earnings. Revenues increased 3.3% year over year to a record $78.4 billion and beat Zacks Consensus Estimate of $76.9 billion.
Apple stock has a Growth score of 'A' alongwith a Value score of 'B.' Investor intending to follow Buffett and be part of Apple's growth story, can play ETFs like iShares Dow Jones US Technology ETFIYW , Select Sector SPDR Technology ETFXLK and Vanguard Information Technology ETFVGT (read: Take a Bite Out of Apple with These ETFs ).
Time to Stay Out of Departmental Stores?
Department stores have been lagging online stores for quite some time now. Investors should note that spending at department stores declined 7.2% in December, representing the 23rd successive month of year-over-year drop (read: Retail ETFs in Trouble With No Q4 Surprise in Store ).
Though sales at department-stores increased 1.2% in January, representing "the biggest increase in more than a year", the shift in consumers' preference from brick-and-mortar to online purchases is major concern for the space.
Probably this is why Buffett shed his holdings by $900 million from the WalmartWMT stock to almost zero stake in the country's largest traditional retailer. Investors too can be watchful about the ETFs heavy on Wal Mart, namely First Trust Nasdaq Retail ETFFTXD and iShares Edge MSCI Multifactor Consumer Staples ETFCNSF .
Build a Billionaire-Like Portfolio
While investing in Berkshire or tracking Buffett's interest on an individual stock basis is always a good way of following him, there are numerous other ways to imitate this stock market veteran's investment theme. One can easily get exposure to funds like Direxion iBillionaire ETF IBLN , Validea Market Legends ETF (VALX) or Guru Index ETFGURU . These funds generally track investment strategies of Wall Street legends.
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