The 5 Greatest Investments of Warren Buffett – The Motley Fool

Posted: October 5, 2019 at 9:45 am


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Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) is one of the most closely studied and followed stock portfolios on the planet and has thrived under the leadership of founder and stock market guru Warren Buffett.

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Here at MyWallSt, we have built our investment strategy around the ideology of Buffett himself: buy and hold 'til we're grey and old! This is the basic tenet of Buffett's strategy: He believes in investing in companies with long-term value rather than a "flash in the pan." We take a look at arguably the five best additions to the Buffett portfolio.

Berkshire Hathaway currently owns roughly 5% of the second-richest company on Earth, Apple (NASDAQ:AAPL). It also happens to be Berkshire's top holding by quite a large margin, coming in at close to a $50 billion market value. Buffett first began buying up shares in Steve Jobs' brainchild in 2016 and has bought more shares every quarter since, with gains coming in at around 25% since its first purchase. Despite Apple's declining hardware sales, Buffett firmly believes in the company's "stickiness," or the ability to remain relevant in everyday consumer life for years to come.

Much of Berkshire's enormous 9.3% stake in Bank of America (NYSE:BAC) came about following the Great Recession of 2008. The investment mogul invested $5 billion into the struggling bank, purchasing the shares at a much-reduced price of $7.14 per share, well below the trading price at the time of $26.99 per share. With the bank growing back to its pre-recession heights, Buffett has seen the market value of his position in BofA grow to $26.7 billion, making it an extremely successful investment.

It's safe to say that Wells Fargo (NYSE:WFC) hasn't been short of scandals in recent years, which has contributed to it being one of the worst-performing banks in the sector. However, through all of this, Warren Buffett has publicly backed his investment and its managers. Wells Fargo is one of Buffett's oldest banking investments, which he bought in 1989 worth $3 per share. With CEO Tim Sloan resigning earlier this year, and its stock price seemingly beginning to become steady after a fluctuating year, the company looks to be on the path to recovery. Despite all this, it's still one of Buffett's top stocks, and he has actually had to sell shares to meet regulatory demands of remaining below 10% ownership, with the market value of his position coming in at close to $20 billion.

Another golden oldie for Warren Buffet -- he purchased his first Coca-Cola (NYSE:KO) stock back in 1988 at a time of struggle-- that appears to still hold his seal of approval despite the changing landscape and growing health-consciousness of the average consumer. Buffett originally paid $1.3 billion for shares of the company, which translates to a current market value of roughly $18 billion, an increase of almost 1,300%. The investment pays Berkshire a massive $650 million per year and has seen increases in annual dividends almost annually for the past 50 years. It pays to own 9.5% of the world's most recognizable beverage maker. Fun fact: Buffett is actually a massive fan of the drink itself, and claims to drink several cans a day.

In a surprising move, Berkshire Hathaway recently bought a stake in e-commerce giant Amazon.com (NASDAQ:AMZN). One of Buffett's two lieutenants, Todd Combs or Ted Weschler, started a position in the first quarter of 2019, and then added shares in the second. Though not a typical Buffett stock, considering its high price and price-to-earnings ratio, the purchase was still a wise move, as Amazon does fit the Buffett model of compounding growth with a formidable moat. The dominant leader in e-commerce over the past 25 years, Amazon has grown into a massive empire including hardware, music, streaming, and more. Not only does its core delivery service control 50% of U.S. market share, but its subsidiaries such as Amazon Web Services are also dominating in their respective fields. It may be too early to call it a great Buffett investment, but it has all the signs of potentially being his greatest yet.

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MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Amazon, Apple, and Coca-Cola. Read thefull disclosure policy here.

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The 5 Greatest Investments of Warren Buffett - The Motley Fool

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October 5th, 2019 at 9:45 am

Posted in Investment




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