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All Contents © 2020The Kiplinger Washington Editors
By Dan Burrows, Contributing Writer
| May 18, 2020
The Berkshire Hathaway (BRK.B) equity portfolio still holds many of the storied blue chips that most investors associated with portfolio. American Express (AXP). Coca-Cola (KO). More recently, Apple (AAPL) and Amazon.com (AMZN).
But a deeper dive into Warren Buffett's stocks reveals a more complicated picture, not to mention a portfolio that has undergone quite a few significant changes of late.
Most notably, Berkshire exited its investments in each of the four major U.S. airlines. The coronavirus pandemic, which put an end to the bull market, also decimated the airline industry. Buffett said as recently as March that he "won't be selling airline stocks," but in early May, Berkshire turned tail, disclosing in filings that it closed out its stakes in United Airlines (UAL), American Airlines (AAL), Delta Air Lines (DAL) and Southwest Airlines (LUV). And Buffett has done plenty more selling on top of that.
Berkshire Hathaway held positions in 43 separate companies (across 46 different stocks thanks to firms with multiple share classes) as of the end of the first quarter, down significantly from 49 in the fourth quarter. That's according to its most recent 13F regulatory filing, submitted to the Securities and Exchange Commission on May 15, as well as additional filings in May and April. But the portfolio of "Buffett stocks" isn't as diversified as the number might suggest. Some are new positions so small they equate to a pinky toe in the water. Other holdings are immaterial leftovers from earlier bets that the Oracle of Omaha has mostly exited, just not completely.
Still, anyone who wants to know which stocks legendary investor Warren Buffett feels are worth his time and attention need look no further than the Berkshire Hathaway equity portfolio. Just remember: A few of these Buffett stocks were actually picked by portfolio managers Todd Combs and Ted Weschler, who many believe are the top candidates to succeed "Uncle Warren" whenever he decides to step down.
Read on as we examine each and every holding to give investors a better understanding of the entire Berkshire Hathaway portfolio.
Price, share totals and other portfolio data as of May 15. Stocks are listed in reverse order of their weight in the Berkshire Hathaway equity portfolio. Sources: Berkshire Hathaway’s SEC Form 13F filed May 15, 2020, for the reporting period ended March 31, 2020; Forms 4, 4/A and and SC 13G/A between April 1 and May 14, 2020; and WhaleWisdom.
Shares held: 59,400
Holding value: $5,549,000
Percent of portfolio: 0.003%
United Parcel Service (UPS, $91.03), the world's biggest package delivery company, managed to survive a culling that claimed not only Berkshire's airline holdings, but also Philips 66 (PSX) and Travelers (TRV). Still, UPS remains the most meager of Buffett stocks. At fewer than 60,000 shares, this is a rump position, leftovers, an odd lot – and it's worth considerably less than it was just three months ago.
Buffett entered his UPS position during the first quarter of 2006, purchasing 1.43 million shares worth about $113.5 million at the time. That comes to an average price per share of $79.38. However, UPS never grew to be a major part of Berkshire's portfolio, and Buffett has pared the position over the years to where it wouldn't be a surprise if he exited the stake at any time.
While Buffett occasionally can be fairly chatty about some of his more notable stock picks, he typically doesn't comment on BRK.B's buys and sells. There's no mention of United Parcel Service in CNBC's indispensable Warren Buffett archive. But one clue as to why UPS never became a bigger part of Berkshire Hathaway's holdings might be its underperformance. Since March 31, 2006, UPS shares have delivered a total return (price plus dividends) of 73%; the S&P 500 Index generated a total return of 198% in that same time frame. That includes a miserable past year that has seen UPS decline 21% while the S&P 500 has lost 11%.
Translation: UPS has been a bust.
Shares held: 39,400
Holding value: $10,155,000
Percent of portfolio: 0.01%
He finally did it.
For years, Warren Buffett has been telling investors that one of the best ways to invest is to simply buy an S&P 500 index fund and keep a little something in Treasuries to help you sleep well in down markets. It's great advice; it just seemed a bit hypocritical coming from one of the market's most celebrated stock pickers. However, in 2020's final innings, Buffett finally took his own medicine and bought not one but two S&P 500-tracking exchange-traded funds (ETFs)
The first of those is the SPDR S&P 500 Trust ETF (SPY, $286.28), which tracks the 500 components of the S&P 500 Index. It does so for a song, too, costing just 0.095% annually, which comes to just $9.50 annually on a $10,000 investment. While many use it as a buy-and-hold investment, its high volume makes it a popular tool for traders, too.
It still makes little sense for a guy who's known for beating the S&P 500 handily over the long-term to buy a fund such as the SPY. After all, an ETF merely tracks an index, and will actually underperform slightly once costs are included. But it's possible that Buffett really wanted to drive his longstanding point home.
Shares held: 43,000
Holding value: $10,183,000
The other S&P 500 tracker Buffett bought in Q4 2019 was the Vanguard S&P 500 ETF (VOO, $263.04), which essentially provides the same exposure as the SPY, just cheaper. Both funds track the S&P 500's components, and both funds are extremely liquid. The VOO just has a lighter fee (typical of Vanguard ETFs) at 0.03% annually, versus the SPY's 0.095%.
If size is any indication, however, Berkshire's investments in the two tracking funds are largely symbolic. Each stake represents less than one one-hundredth of a percent of Berkshire Hathaway's equity holdings.
Shares held: 578,000
Holding value: $28,946,000
Percent of portfolio: 0.02%
Warren Buffett has never seemed all that enamored with Mondelez (MDLZ, $49.96), whose brands include Oreo cookies and Triscuit crackers. But his tiny holding has held up relatively well compared to the market, outperforming by about 3 percentage points.
In 2007, Buffett invested in what was then known as Kraft Foods. The packaged food company changed its name to Mondelez in 2012 after spinning off its North American grocery business, which was called Kraft Foods Group and traded under the ticker KRFT. Kraft Foods Group later merged with H.J. Heinz, in a 2015 deal backed by Buffett, to form Kraft Heinz.
A couple years later, in 2017, Buffett shot down speculation that Kraft Heinz would buy the global snacks giant.
Berkshire Hathaway maintains a significant stake in KHC (more on that in a bit). MDLZ, not so much. Berkshire isn't even among Mondelez's top 100 shareholders, at just 0.04% of MDLZ shares outstanding, according to data from S&P Global Market Intelligence. And Mondelez accounts for just 1/50th of a percent of the total value of BRK.B's equity portfolio.
Nothing to see here, folks.
Shares held: 315,400
Holding value: $34,694,000
Procter & Gamble (PG, $114.61) is among several Dow stocks that Warren Buffett holds. But like UPS, it has fallen by the wayside as a Berkshire Hathaway investment.
Buffett came to own P&G – maker of Tide detergent, Crest toothpaste and Pampers diapers – via the holding company's 2005 acquisition of razor-maker Gillette. At the time, Buffett, a major Gillette shareholder, called the tie-up a "dream deal." Procter & Gamble became one of BRK.B's biggest equity positions.
The dream didn't last long. The Great Recession eroded the pricing power of old-line consumer staples companies such as P&G. The company embarked on a plan to shed 100 underperforming brands. The Duracell battery business happened to be on the list, and Berkshire bought it in 2014 in exchange for PG stock. Two years later, Buffett pared what was left of the P&G stake by 99%. He hasn't added to the position since.
While this "Buffett stock" is almost phased out, Berkshire was smart not to eliminate it yet. P&G has only pulled back 7% year-to-date, and is one of Buffett's best holdings of the bear market.
Shares held (Class A / Class C): 2,630,792 / 1,284,020
Holding value (Class A / Class C): $27,676,000 / $13,174,000
Percent of portfolio (Total): 0.03%
Berkshire has made several de facto bets on legendary pay-TV mogul John Malone. Liberty Latin America Class A (LILA, $9.08) and Liberty Latin America Class C (LILAK, $8.88) shares are the smallest of those, and they got a little smaller during the first quarter of 2020, as Buffett shed roughly 84,000 Class A shares.
Liberty Latin America provides cable, broadband, telephone and wireless services in Chile, Puerto Rico, the Caribbean and other parts of Latin America. Liberty Global, the multinational telecommunications company in which Berkshire also holds a stake, issued tracking stock of its Latin American operations in 2015, then spun off those operations entirely in 2018.
Malone, a pioneer in the telecom industry and a multibillionaire himself, has created outsize value for shareholders over his long career. And as you'll see, Berkshire has several other investments in Malone-backed enterprises ... and recently pared back most of them.
Nonetheless, the initial appeal to Buffett and his portfolio managers is plain to understand: Game knows game.
Shares held: 327,100
Holding value: $42,893,000
Percent of portfolio: 0.03%
Berkshire's interest in Johnson & Johnson (JNJ, $150.44) peaked more than a decade ago. Now, like fellow defensive stock P&G, JNJ has fallen out of favor with Buffett and represents nothing more than a token holding.
You can blame the diversified health-care giant's history of headline-grabbing faceplants. The health care stock struggled with manufacturing problems and allegations of illegal marketing practices in 2010 and 2011. Buffett was critical of the company for those gaffes, as well as for using too much of its own stock in its 2011 acquisition of device-maker Synthes. Disenchanted with Johnson & Johnson, Berkshire dumped most of its stake in 2012.
Berkshire's position in JNJ topped out at 64.3 million shares in 2007. Today, the holding company's equity stake comes to just 327,100 shares (about $43 million), which represents roughly one one-hundredth of shares outstanding. This holding could disappear at any time, and it'd hardly be noticed.
Shares held: 1,708,348
Holding value: $171,638,000
Percent of portfolio: 0.10%
Warren Buffett, who already is positioned in home furnishings retail via its Nebraska Furniture Mart subsidiary, added more exposure to the space with his Q3 2019 entry into RH (RH, $154.63), then made a considerable addition to his stake to close out the year.
RH, formerly known as Restoration Hardware, operates 106 retail and outlet stores across the U.S. and Canada. It also owns Waterworks, a high-end bath-and-kitchen retailer with 15 showrooms. While brick-and-mortar retailers have struggled mightily over the past few years thanks in part to the rise of e-commerce, RH has found success catering to the upper crust. Indeed, at the end of March, RH boasted "record results across every key metric of our business." However, the coronavirus outbreak has since forced RH to furlough employees and slash spending.
Buffett typically doesn't comment on Berkshire Hathaway's holdings, and that's true for RH, so it's not certain exactly what attracted the Oracle of Omaha. It is possible this was a move made by Buffett lieutenant Ted Weschler or Todd Combs. But the stake fits broadly with Buffett's worldview. Buffett stocks tend to be bets on America's growth, which is exactly what a bet on housing and housing-related industries is.
That stake grew considerably in Q4 2019 as Berkshire added more than 500,000 new shares. Berkshire is now the fifth-largest investor in the home retailer by virtue of owning about 8.9% of all RH shares outstanding.
Shares held: 643,022
Holding value: $203,440,000
Percent of portfolio: 0.12%
Berkshire Hathaway already had a few health care holdings heading into the final quarter of 2019, and Buffett added to that number with his Q4 entry into biotechnology giant Biogen (BIIB, $316.60). The roughly 650,000-share stake is worth more than $203,440,000.
That's hardly a huge stake, as far as Buffett stocks go. The holdings account for only a little more than a tenth of a percent of BRK.B's total equity portfolio. And Berkshire's not even one of Biogen's top 25 investors at just 0.4% of BIIB shares outstanding.
While Buffett has a history of making bets on the health care sector, the small stake size signals this might be an idea from lieutenants Ted Weschler or Todd Combs.
Biogen's fates are most heavily tied at the moment to its Alzheimer's treatment. Many expect the company to seek out FDA approval for aducanumab sometime early this year.
While Buffett is known for his value tilt, some of his stocks are bound to fall out of value territory over time. But BIIB still trades at less than 10 times analysts' expectations for next year's earnings. Better still, Biogen also reliably generates several billion dollars each year in free cash flow.
Shares held: 18,933,054
Holding value: $219,245,000
Percent of portfolio: 0.13%
Warren Buffett has spent the past year bulking up a stake in Occidental Petroleum (OXY, $13.82), and he has been poorly compensated for his efforts.
Buffett invested $10 billion in the integrated oil-and-gas company in late April 2019 to help finance a $38 billion bid for exploration-and-production firm Anadarko Petroleum. In return, Berkshire received 100,000 preferred shares yielding 8%. The bid beat out a competing offer from Chevron (CVX) but irked fellow octogenarian billionaire Carl Icahn, who owns a 5% stake in OXY. He called the deal "hugely overpriced" and still is fighting to scuttle the deal.
Buffett became even further entrenched by sinking more than $330 million into OXY common shares in Q3, which was expected to make Icahn's fight even more difficult. He then widened his stake by a whopping 154% in the final quarter of 2019, when he snapped up roughly 11.5 million more shares. Then in March, the company reached a truce with Icahn and agreed to make a few changes to its board.
Berkshire's stake represents 2.1% of Occidental's shares, making it the company's eighth-largest stakeholder. But it's a meager portion of the Berkshire Hathaway portfolio, which has probably been for the best this year. Crashing oil prices have slashed Occidental's value by two-thirds in 2020, and it forced OXY to cut its dividend.
Shares held: 14,949,031
Holding value: $236,195,000
Percent of portfolio: 0.14%
Warren Buffett exited his stake in Phillips 66 in Q1 2020, leaving just Occidental and Suncor Energy (SU, $16.15) as the only energy stocks in the Berkshire Hathaway portfolio. Buffett did trim his position in Canada's biggest oil-and-gas company, but only by a mere 70,000 shares, or about half a percent.
If this bet on Suncor sounds familiar, it should: When Buffett entered SU during the fourth quarter of 2018, that marked the second time Berkshire Hathaway has taken a stab at Suncor. The company originally invested in the energy giant in 2013, then sold the entirety of the position three years later. Suncor – an integrated energy giant whose operations span oil sands developments, offshore oil production, biofuels and even wind energy – also sells its refined fuel via a network of more than 1,500 Petro-Canada stations.
Berkshire increased its stake by 40% during the final quarter of 2019 before making a slight reduction in Q1 2020. It's still a small holding, representing about 0.14% of the Berkshire equity portfolio's worth, according to data from S&P Global Market Intelligence. But the stake is meaningful to Suncor, as it represents roughly 1% of its shares outstanding.
And income investors, take note: Suncor is a member of the Canadian Dividend Aristocrats by virtue of having raised its annual dividend payouts for 18 consecutive years.
Shares held: 1,920,180
Holding value: $296,841,000
Percent of portfolio: 0.17%
Berkshire Hathaway took a machete to its Goldman Sachs (GS, $171.87) stake for the second consecutive quarter. The holding company dumped more than 10 million shares, or about 84% of its stake, in Q1 2020 to give GS a severely diminished position among Buffett's stocks.
Berkshire first picked up its stake in Goldman during the 2008 financial crisis. Buffett paid $5 billion for preferred shares and warrants to purchase common stock. The preferred shares came with a dividend yield of 10% – almost twice the rate of some preferred stocks, which already are considered generous income plays.
Goldman redeemed its preferred shares in 2011. Berkshire bought another $2 billion in GS stock when it exercised the warrants in 2013.
Buffett parlayed the original investment into what at one point was a $3.8 billion, 5.1% stake in Wall Street's preeminent investment bank that made Berkshire its fourth-largest shareholder. Buffett sold nearly a third of his holdings during Q4 2019 but maintained a 3.3% stake. After the Q1 flush, Berkshire now claims a mere 0.6% stake in Goldman.
Shares held: 14,166,748
Holding value: $308,410,000
Percent of portfolio: 0.18%
Berkshire Hathaway announced in October 2018 that it would take a stake in StoneCo (STNE, $21.88) as the Brazilian financial technology company went public. Given the relatively small position in STNE, and the fact that it's a fintech company, you won't be surprised to learn the position was initiated by Buffett lieutenant Todd Combs – with the Oracle of Omaha's blessing, no doubt.
StoneCo provides software and hardware for companies to facilitate credit- and debit-card payments, and it's one of the "growthiest" Warren Buffett stocks without a doubt. Its fiscal 2019 client base grew 84% year-over-year. Revenues jumped 63.1% to 2.58 billion Brazilian reals ($440 million), while adjusted net income rocketed 150% higher to 804.2 million reals ($137 million).
While not necessarily in the Buffett stocks blueprint, StoneCo nonetheless fits well with Berkshire Hathaway's general bullishness on companies that facilitate and process payments. "Payments are a huge deal worldwide," Warren Buffett said at Berkshire's 2018 shareholder meeting.
Berkshire holds 5.1% of the company's shares outstanding, making it StoneCo's sixth-largest shareholder.
Shares held: 20,128,000
Holding value: $323,860,000
Percent of portfolio: 0.19%
Synchrony Financial (SYF, $16.54) jibes with Buffett's affection for credit-card companies and banks. Synchrony, a major issuer of charge cards for retailers, was spun off of GE Capital in 2014. It's both a lender and a payments processor – like Buffett's beloved American Express – but it caters to customers who skew more toward the middle and lower end of the income scale.
Berkshire initiated a position in SYF during the second quarter of 2017, paying an estimated price per share of $30.02. Since the end of Q2 2017, the stock has lost more than 40% of its value, versus a 25% positive total return for the S&P 500 during that time.
BRK.B sold 675,000 shares, or about 3% of its stake, in Q1 2020. It now owns 3.4% of Synchrony Financial's shares outstanding, which makes it the firm's eighth-largest shareholder.
Shares held: 18,621,674
Holding value: $337,425,000
Percent of portfolio: 0.20%
Berkshire's position in Store Capital (STOR, $17.15), which it entered during the summer of 2017, was an unusual one. Real estate investment trusts (REITs) – a way to invest in real estate without owning the actual assets – have never been big among Buffett stocks.
Store invests in single-tenant properties including chain restaurants, supermarkets, drugstores and other retail, service and distribution facilities. That is to say, Store is a bet on brick-and-mortar retail, which is thought to be in permanent decline.
Buffett, however, spied value – and he spied it for quite some time. Store Capital CEO Christopher Volk told CNBC that Buffett studied the REIT for three years before taking his position.
Berkshire Hathaway owns 18.6 million shares, which yields about 8.2% at current prices, courtesy of a nasty 53% plunge since the start of 2020. BRK.B owns 7.6% of shares outstanding, making it Store Capital's second-largest shareholder after Vanguard.
Shares held: 8,438,225
Holding value: $337,782,000
Investors might be forgiven if they're unfamiliar with Restaurant Brands International (QSR, $51.42). After all, it's a pretty bland name.
But they surely know Canadian company's fast-food brands.
QSR was formed by the 2014 merger of Burger King and Tim Hortons. Three years later, the company acquired Popeyes Louisiana Kitchen, making it the world's fifth-largest operator of fast food restaurants. It has since moved up to fourth.
So where does Warren Buffett come in? Berkshire Hathaway helped fund Burger King's acquisition of Tim Hortons by purchasing a combination of preferred shares and warrants. In a classic Buffett move, he was able to finagle a 9% yield from the preferred shares. QSR redeemed the preferreds in 2017, adding to Berkshire's cash pile.
BRK.B still owns 2.8% of the fast-food company's shares outstanding, making it QSR's ninth-largest investor at present.
Shares held: 42,789,295
Holding value: $384,248,000
Percent of portfolio: 0.22%
Berkshire Hathaway's move into Teva Pharmaceutical (TEVA, $11.21) during 2017's fourth quarter looked like a classic Warren Buffett value move at the time.
The Israel-based drug manufacturer was out of favor – to put it mildly. A bloated balance sheet, mass layoffs and the looming expiration of drug patents had short sellers licking their chops.
By the time Buffett stepped in, Teva shares were off about 70% from their mid-2015 peak. Berkshire then doubled his stake in Teva during the first quarter of 2018, when shares looked really cheap.
They look cheaper now. Shares are off 34% since the start of Q2 2018 and trade at just 4.4 times analysts' estimates for future earnings, which is a fraction of the S&P 500's forward P/E. But Teva's shares have been a pleasant surprise in 2020, gaining 14% year-to-date. Nonetheless, Berkshire trimmed its stake by 1% in Q1, leaving it with 3.9% ownership of the company.
Shares held: 24,070,000
Holding value: $415,689,000
Percent of portfolio: 0.24%
Axalta Coating Systems (AXTA, $19.70), which makes industrial coatings and paints for building facades, pipelines and cars, is the belle of the ball when it comes to mergers and acquisitions suitors. The company has rejected more than one buyout bid in the past, and analysts note that it's a perfect target for numerous global coatings companies.
Axalta joined the ranks of the Buffett stocks in 2015, when Berkshire Hathaway purchased 20 million shares in AXTA from private equity firm Carlyle Group (CG). The stake makes sense given that Buffett is a long-time fan of the paint industry; Berkshire Hathaway bought house-paint maker Benjamin Moore in 2000.
Berkshire is Axalta's largest investor, holding 10.2% of the shares outstanding. That's slightly smaller than it was in Q4 2019, as Buffett unloaded 194,000 shares, or less than 1% of Berkshire's stake, during Q1 2020.
Shares held (Class A / Class C): 19,310,000 / 7,346,968
Holding value (Class A / Class C): $318,808,000 / $115,421,000
Percent of portfolio (Total): 0.26%
Liberty Global Class A (LBTYA, $21.83) and Liberty Global Class C (LBTYK, $21.30) is another one of Berkshire's bets on communications and media companies whipped up by billionaire dealmaker John Malone.
Liberty Global bills itself as the world's largest international TV and broadband company, with operations in seven European countries. Berkshire's investment in the Class A shares dates to the fourth quarter of 2013. It picked up the Class C shares, which have no voting power, in the first quarter of 2014.
Rumors had the company buying Univision for $9 billion, but CEO Mike Fries shot that down. That said, Liberty Global does plan to extend its international partnership with Netflix (NFLX).
Berkshire trimmed its Class A shares by 2% during the quarter but left its Class C shares untouched. Berkshire remains the second-largest holder of LBTYA at 3.1% of shares outstanding, and the No. 10 holder of LBTYK at 1.2%.
Shares held: 6,353,727
Holding value: $457,278,000
Percent of portfolio: 0.27%
Globe Life (GL, $68.76) – known as Torchmark up until 2019 – is a small holding for Berkshire Hathaway, but a natural Buffett stock. After all, it's a life and health insurance company, and various wholly owned insurance firms form the core of BRK.B's holdings.
Berkshire Hathaway has owned shares in Globe Life/Torchmark since early 2001. And while it's a boring company, it has quietly been a very good stock pick. Including dividends, GL has generated a total return of 379% since March 31, 2001, easily outdoing the S&P 500's 261% performance with dividends included.
BRK.B owns 5.9% of Globe Life's shares outstanding, which makes it the firm's third-largest shareholder after Vanguard and BlackRock (BLK).
Shares held: 5,382,040
Holding value: $556,665,000
Percent of portfolio: 0.33%
Warren Buffett has been a fan of M&T Bank (MTB, $89.12) for a very long time. Indeed, MTB has been a member in good standing of Berkshire Hathaway's equity portfolio since 2001.
The regional bank operates more than 690 branches in nine states, including New York, Maryland and New Jersey, as well as Washington, D.C., and it has been profitable year after year for decades. It also has been a reliable dividend payer. Buffett has a soft spot for well-run, unassuming businesses. And he frequently cites the importance of management talent when it comes to deciding where to invest. He certainly was a fan of M&T Bank's late CEO.
In 2011, Buffett recommended that Berkshire Hathaway shareholders read M&T's annual reports, which were written by Robert Williams, chairman and CEO from 1983 until his death in 2017. "Bob is a very smart guy and he has a lot of good observations," Buffett said.
M&T Bank represents a small portion of Berkshire Hathaway's equity portfolio, but BRK.B is a big holder of MTB. With 4.2% of shares outstanding, Berkshire is the bank's sixth-largest shareholder.
Shares held: 18,940,079
Holding value: $570,475,000
Berkshire Hathaway's recently announced stake of supermarket titan Kroger (KR, $32.51) was a little bit of a head-scratcher. Many long-term investors have soured on traditional supermarket chains in a world where Walmart (WMT), Amazon.com and other large firms are vying to rule the grocery space.
It also was something of a reversal from Berkshire's other new positions, which have been a little more forward-looking. Kroger is an old-economy value play, compared to tech and biotech buys such as Apple, Amazon, StoneCo and Biogen.
Nonetheless, in 2019's final quarter, Buffett initiated a 18.9 million-share position currently makes Berkshire the sixth-largest investor in Kroger at 2.4% of shares outstanding. Admittedly, it's not a home-run swing, at just 0.33% of BRK.B's total equity portfolio, but its 13% returns year-to-date have no doubt been welcome as so many other Buffett stocks have floundered.
KR is positioned to give the likes of Amazon and Walmart a fight going forward, too. The company has roughly 2,760 retail food stores operating under such banners as Dillons, Ralph's, Harris Teeter and its namesake Kroger, as well as 1,537 gas stations and even 256 jewelry stores under banners including Fred Meyer Jewelers and Littman Jewelers. This is a high-margin business with good cash flow. In fact, it's one of the five largest retailers in the world.
Shares held: 132,418,729
Holding value: $654,149,000
Percent of portfolio: 0.38%
Sirius XM (SIRI, $5.34) – a company that reaches more than 100 million listeners via its core satellite radio business and Pandora, which it acquired in 2018 – is another stock pick related to John Malone. Malone is chairman of Liberty Media, which owns a massive stake in Sirius XM.
It's also another Malone connection that Buffett cut back on in Q1 2020.
As Kiplinger has noted, it's possible that all of Berkshire's investments in companies that are somehow tied to Malone's truly Byzantine corporate structure could very well be the responsibility of one of Buffett's portfolio managers. Liberty Media was a large position held by Ted Weschler's Peninsula Capital in his pre-Berkshire days.
Berkshire first bought shares in SIRI during the final quarter of 2016. Berkshire unloaded a small portion (1%) of its Sirius XM position during the third quarter. The Oracle of Omaha then trimmed his position by another 3.9 million shares, or about 2% of Berkshire's stake, in Q1 2020. Still, its 3% stake makes it the company's third-largest shareholder after Liberty Media, which owns 71% of the shares outstanding, and BlackRock (3.1%).
Shares held: 9,197,984
Holding value: $880,431,000
Percent of portfolio: 0.52%
PNC Financial Services (PNC, $97.25) is a rare Buffett buy in 2020. Berkshire first started investing in PNC, the nation's sixth-largest bank by assets and second-largest regional lender, during the third quarter of 2018. Buffett upped Berkshire Hathaway's stake by another 4% in Q1 2019. And he added another 6%, or 526,930 shares, to start this year.
His holding company is now PNC's ninth-largest investor with 2.2% of the bank's shares outstanding.
Buffett has long been comfortable with investing in the banking business. At the 1995 Berkshire Hathaway annual meeting, he said the industry "falls within our circle of competence to evaluate." Given Berkshire's extensive holdings in banks (we'll get to a few more momentarily), Buffett clearly has seen a lot of value in this corner of the market. However, 2020 has been particularly unkind to those investments, including PNC, which is off 38% year-to-date.
Shares held: 533,300
Holding value: $1,039,786,000
Percent of portfolio: 0.61%
Amazon.com (AMZN, $2,409.78) is one of Berkshire Hathaway's splashiest new stock picks of the past year. The holding company disclosed its 483,300-share position after the first quarter of 2019, then added another 54,000 shares in Q2.
This one wasn't Buffett's idea, by his own admission. Before Berkshire Hathaway submitted its first-quarter regulatory filing with the Securities and Exchange Commission, Buffett told CNBC: "One of the fellows in the office that manage money ... bought some Amazon, so it will show up (when that file is submitted)."
Buffett has long been an admirer of Amazon CEO Jeff Bezos, he admitted in an interview, and said he wished he'd bought the stock sooner. "Yeah, I've been a fan, and I've been an idiot for not buying" AMZN shares, Buffett told CNBC.
Berkshire still is an insignificant shareholder, however, boasting about 0.1% of Amazon's shares outstanding. Interestingly, Buffett marginally reduced the position by 4,000 shares in Q1.
Shares held: 4,934,756
Holding value: $1,192,040,000
Percent of portfolio: 0.70%
Warren Buffett gives credit where credit is due. While Berkshire Hathaway does indeed own Mastercard (MA, $278.94), he has nodded to his portfolio managers Todd Combs and Ted Weschler, and said he wishes he had pulled the trigger on the opportunity earlier.
"I could have bought them as well, and looking back, I should have," Buffett said about Visa (V) and Mastercard in 2018, referring to his own investment in American Express.
Mastercard, which boasts 926 million cards in use across the world, is one of several payments processors under the Berkshire umbrella. MA entered the portfolio during the first quarter of 2011, and given the stock's performance ever since, it's obvious why Buffett wishes Berkshire Hathaway owned more. Including dividends, MA shares have returned 1,060% since March 31, 2011 – several times better than the S&P 500's 161% total return over that same time frame.
Shares held: 4,333,363
Holding value: $1,235,572,000
Percent of portfolio: 0.72%
Costco (COST, $299.21) joined the ranks of the Buffett stocks a long time back – the first quarter of 2001, to be precise. It's not a particularly large holding, at just more than half a percent of the Berkshire Hathaway portfolio, but it seems to be a cherished one.
And unlike many Buffett stocks, the Oracle is happy to talk about Costco at length.
"Here (Kraft Heinz) are, 100 years plus, tons of advertising, built into people's habits and everything else," Buffett told CNBC in a February 2019 interview. "And now, (Costco's) Kirkland, a private-label brand, comes along and with only 250 or so outlets, does 50% more business than all the Kraft Heinz brands."
Indeed, Costco's Kirkland store-branded products are one of the warehouse retailer's biggest draws. Revenues from the Kirkland label totaled $39 billion in 2018 – more than 27% of Costco's overall annual sales, and about 50% greater than Kraft Heinz's total sales across 2018.
In 2020, Costco has stood out with a 2% total return year-to-date, thanks in large part to the company's "essential" status; Americans swarmed Costco locations in March and April to stockpile necessities as states rolled out stay-at-home policies.
Berkshire's 4.3 million shares represent a roughly 1% equity stake in the company – not unsubstantial, but well outside Costco's top 10 institutional stakes.
Shares held (Class A / Class C): 14,860,360 / 30,850,985
Holding value (Class A / Class C): $470,925,000 / $975,508,000
Percent of portfolio (Total): 0.85%
Berkshire has managed to find a way to own Sirius XM in not one, not two, but three different ways.
Liberty Media has for years held a large stake in Sirius XM Holdings. But in 2015, the company actually recapitalized, offering (among other things) several tracking stocks that allowed investors to enjoy in the performance of Liberty's Sirius XM investment directly rather than get it piecemeal through Liberty Media itself.
Thus, Buffett was exposed to Sirius XM before it directly invested in SIRI shares in Q4 2016. But over time, he has bought more of the tracking stock; the overall body of tracking stock currently represents Liberty's roughly 70% stake in Sirius XM. The Berkshire Hathaway portfolio now holds more than 45 million shares of Liberty Sirius XM Group Series A (LSXMA, $31.80) and Liberty Sirius XM Group Series C (LSXMK, $31.44) combined. That sum is a little smaller than it was a quarter ago, as Buffett dumped 240,000 Series C shares representing a tiny slice of his stake.
Warren Buffett is the largest institutional shareholder in each class, holding 4.2% of Liberty Sirius XM's A shares, and 8.7% of the C shares. Combined with his SIRI stake, the Oracle of Omaha holds three different investments in Sirius XM.
Shares held: 74,681,000
Holding value: $1,551,872,000
Percent of portfolio: 0.91%
Warren Buffett first took a stake in General Motors (GM, $22.63), the world's fourth-largest auto manufacturer by production, in early 2012. And he must've seen something he liked. He upped Berkshire Hathaway's holdings during the fourth quarter of 2018, when he increased his position by 37%, then tacked on another 4% to his stake during 2019's final quarter.
That brought his total to a cool 75 million shares on the dot, but he sold off about 319,000 shares during 2020's first quarter. Nonetheless, he still owns 5.1% of the automaker's shares outstanding, making Berkshire the company's sixth-largest investor.
GM has always looked like a classic Buffett value bet. General Motors is an iconic American brand and a play on the long-term growth of the U.S. economy. Buffett also likes CEO Mary Barra, singing her praise on multiple occasions. At one point, he said, "Mary is as strong as they come. She is as good as I've seen."
But General Motors hasn't returned the favor. Berkshire paid an estimated average price per share of $31.82 when he initiated his position during the first quarter of 2012. Shares now trade in the low $20s, widely underperforming the market in that same time. Even worse: Buffett isn't even collecting dividend income on his position anymore, as GM suspended its dividend in late April.
Shares held: 10,562,460
Holding value: $1,701,823,000
Percent of portfolio: 1.00%
Visa (V, $183.49) operates the world's largest payments network, and thus is well-positioned to benefit from the growth of cashless transactions and digital mobile payments. Like Mastercard, Visa was the idea of lieutenants Todd Combs and/or Ted Weschler (Buffett won't tell). And like Mastercard, Buffett wishes Berkshire had bought more.
Berkshire Hathaway first bought Visa in the third quarter of 2011, and it has proven to be a mammoth winner. Including dividends, Visa has delivered a whopping annualized return of 30.5% since Sept. 30, 2011. It's also a dividend-growth machine, ramping up its payout by 150% over the past five years alone.
"If I had been as smart as Ted or Todd, I would have (bought Visa)," Buffett told shareholders at the 2018 annual meeting.
It's a modest but not insignificant holding at 1% of Buffett's portfolio. However, Berkshire's half-percent stake in Visa doesn't even put it among the top 25 investors.
Shares held: 12,815,613
Holding value: $2,307,964,000
Percent of portfolio: 1.35%
Berkshire bought Verisign (VRSN, $217.25) – an internet infrastructure service company that quite literally keeps the world connected online and acts as a domain registry for the .com, .net and other top-level domains – during a dip in the final quarter of 2012.
The company's dominance of the space exemplifies Buffett's love of deep moats, and the stake has paid off well. VRSN is up nearly 13% in 2020, and it has raced ahead 460% since the start of 2013, well more than tripling the S&P 500's 134% total return.
Just remember: Stocks aren't good or bad in a bubble – one investor's brilliant purchase often is, depending on timing, another investor's biggest failure.
Stanley Druckenmiller, a famed former hedge fund manager, didn't have nearly as much luck with Verisign. Druckenmiller made a $200 million short on tech stocks in early 1999 while investing for George Soros' Quantum Fund, but lost $600 million in the trade. He then tried to win it back via a big $6 billion buy-in of tech stocks including Verisign … but he lost $3 billion in six weeks as VRSN and several other recent purchases flopped, making it one of the "smart money's" worst stock calls of all time.
Berkshire Hathaway now owns almost 13 million shares in the company, making it the largest institutional investor in Verisign at an 11.1% ownership stake.
Shares held: 5,426,609
Holding value: $2,367,684,000
Percent of portfolio: 1.39%
Charter Communications (CHTR, $503.39) is yet another Berkshire Hathaway portfolio holding with a John Malone connection – albeit a small one now. Malone served on the telecom and media company's board of directors from 2013 until 2018, when he stepped down to concentrate his focus on a smaller group of companies. (He does remain a director emeritus, however.)
Charter Communications markets cable TV, internet, telephone and other services under the Spectrum brand, which is America's second-largest cable operator behind Comcast (CMCSA). It greatly expanded its reach in 2016 when it acquired Time Warner Cable and sister company Bright House Networks.
Buffett entered CHTR in the second quarter of 2014, but he has seemingly lost his love for the telecom company in recent years. His position has been trimmed down from 9.4 million shares in early 2017 to just 5.4 million shares as of Berkshire's most recent 13F. The move away from Charter meshed with a lousy 2018 for the stock, which lost 15% that year. But his timing in 2019 wasn't great. He continued to cut away at his position during the first and second quarters; CHTR shares finished the year with a 70% return.
The current stake represents 1.4% of Berkshire Hathaway's holdings, and a decent-sized 2.3% ownership in Charter.
Shares held: 79,765,057
Holding value: $2,686,487,000
Percent of portfolio: 1.57%
Bank of New York Mellon (BK, $32.06) isn't a household name, but it's a big deal in financial services. And Warren Buffett has been a fan for some time.
Bank of New York Mellon is a custodian bank that holds assets for institutional clients and provides back-end accounting services. Its roots actually go all the way back to 1784, when Bank of New York was founded by a group including Alexander Hamilton and Aaron Burr. Today, BK is the nation's ninth-largest bank by assets, according to data from the Federal Reserve.
Berkshire Hathaway first took a position in BK back during Q3 2010, when it paid an estimated average price of $43.90. Warren Buffett last added to Berkshire's stake in BK during the fourth quarter of 2018, when he increased Berkshire's investment by 3%, or more than 3 million shares.
While Buffett trimmed his holdings by a little more than 1% during 2019's fourth quarter, he retained nearly 80 million shares. That translates into a still-massive 9% stake currently that makes it BK's largest investor by a decent margin. (Vanguard is No. 2 at 7.3%.)
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