Warren Buffett’s famed annual letter is due to be released this weekend. With that, today we want to talk a bit about his record, his philosophy on markets and successful investing and the high conviction stocks that he has in his $130 billion plus Berkshire Hathaway stock portfolio.
First, only one living investor has a length of track record that can compare to Buffett’s. That’s fellow billionaire Carl Icahn. Icahn actually has a better record than Buffett, and it spans a little longer. But he gets a fraction of the attention of the man they call the Oracle of Omaha.
Still, Buffett has an amazing record and knows how to capitalize on his brand, which not only grows his empire but also helps drive value in the companies he invests in.
In the recent market environment, Buffett has aggressively been adding to stakes in key sectors of the economy. Energy is one of those. One of Buffett’s more famous proverbs is to “be greedy when others are fearful.” He did just that at the depths of the financial crisis, buying bank stocks. And recently he’s been taking advantage of the beaten down energy sector to load up on premium stocks at distressed valuations.
Another great observation from Buffett, that should give everyone perspective when stocks are in periods of decline and people are handwringing about a variety of risks, he says: “In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”
Now, while his investment vehicle, Berkshire Hathaway holds nearly 50 stocks, and a variety of other investment instruments, his long stock portfolio is actually highly concentrated. In fact, if you bought just his top six stocks, you would get the lion’s share of his returns.
Here’s a look at the six stocks that make up more than 70% of his portfolio:
- Wells Fargo (WFC) – This is a huge position at 19.7% of the Berkshire portfolio.
- Kraft Heinz (KHC) – is currently 17.9% of Buffett’s portfolio.
- Coca Cola (KO) – is currently 13% of Buffett’s portfolio.
- International Business Machines (IBM) – is currently 8.4% of Buffett’s portfolio.
- American Express (AXP) – is currently 8% of Buffett’s portfolio.
- Phillips 66 (PSX) – is currently 4.5% of Buffett’s portfolio.
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