Warren Buffett might be the greatest investor of all time, but he is not immune to the current market downturn anymore than you or I are. With the S&P 500 and Nasdaq indices each down more than 20% on the year and in bear markets, the selloff has negatively impacted all investors, even Buffett and his holding company Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B). While Warren Buffett stock picks usually perform great over the long term, some of his stocks are down more than 50% this year. Here are the seven worst performing Warren Buffett stocks of 2022.
Procter & Gamble
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Buffett is famously bullish on credit card companies. He currently holds more than $1 billion of stock in the three major credit card issuers, American Express (NYSE:AXP), Mastercard (NYSE:MA) and Visa (NYSE:V).
Buffett’s position in American Express is one of his five largest at more than $21 billion, and he has held AXP’s shares since the mid-1970s. And while all three major credit card stocks are down this year, Mastercard has performed the worst with a 16% decline That compares to a drop of 13% and 11% for Visa and American Express, respectively.
The drop of MA stock can be partly attributed to the broader market decline and also to the company’s increasing push into cryptocurrencies. Just recently, Mastercard announced its intention to help banks and other financial institutions trade crypto.
Specifically, Mastercard said it will act as a “bridge” between banks and Paxos, a cryptocurrency trading platform that it has partnered with. A pilot project related to the initiative is set to launch early next year.
This latest announcement comes after MA earlier this year said it would enable its nearly 1 billion cardholders to spend digital coins and tokens at more than 30 million supported merchants worldwide. But with the price of Bitcoin (BTC-USD), the largest cryptocurrency, down 60% this year and trading under $20,000, many investors are taking a pass on MA stock for now.
Procter & Gamble (PG)
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Procter & Gamble (NYSE:PG) is the type of established blue-chip stock that Buffett is famous for owning. The Cincinnati-based company that has been a going concern since 1837 also sells the type of foundational consumer products that are supposed to be largely immune to inflationary pressures.
PG also sells the types of staple offerings that Buffett loves. This is, after all, a man who owns the Fruit of the Loom underwear company. However, Procter & Gamble’s product line, which includes Bounty paper towels, Tide laundry detergent, and Crest toothpaste, hasn’t helped its stock price lately.
So far in 2022, PG stock has declined 21% as the company grapples with higher prices that have pushed some consumers away and led to bloated inventory levels. While the drop of Procter & Gamble’s share price has not been as bad as the declines of many technology companies’ stocks this year, it is still a notable drop for a typically reliable blue-chip stock that Buffett has recommended throughout his long and illustrious career.
Perhaps Buffett can comfort himself with the fact that he has a comparatively small stake in PG stock at $40 million, while the shares pay a quarterly dividend that yields a decent 2.85%.
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Amazon (NASDAQ:AMZN) is one of only a few technology stocks that Buffett holds in his portfolio. However, the e-commerce giant hasn’t done the Oracle of Omaha any favors this year. This year, the share price of AMZN stock has plunged 30% to its current level of $116.50. (The stock’s price was also lowered by a 20-for-1 split executed in June).
Amazon’s stock has basically given up all the gain that it achieved during the pandemic when consumers around the world were forced to shop for essentials online.
With the global economy reopened and consumers returning to in-person shopping, Amazon has had to reverse course on the aggressive growth plans it put into motion during the Covid-19 crisis.
In 2022, Amazon has canceled the construction of multiple, new fulfillment centers, closed existing facilities around the world, laid off more than 100,000 people, and held not one but two Prime Day sales events to try to boost its flagging revenue.
It’s a good thing that Buffett is a long-term buy-and-hold investor as none of these measures has yet positively impacted AMZN stock.
Paramount Global (PARA)
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Buffett bought Paramount Global’s (NASDAQ:PARA) shares in Q1, and it turned out to be a poorly timed purchase.
Berkshire Hathaway took a $2.6 billion stake in the entertainment and streaming company in Q1. However, on March 31 of this year (the last day of Q1), PARA stock was trading near its 52-week high of $39.92 a share. Since then, the stock has collapsed and fallen over 50% to its current level of $19.50. Since the first trading day of the year, PARA stock is down 40%. There’s little doubt that Buffett is underwater on Paramount Global.
Berkshire’s purchase of PARA stock was a bit odd given that Buffett doesn’t hold the shares of any other pure-play entertainment companies. At the time his holding of Paramount Global was disclosed in an SEC filing, many market observers saw it as a bet on the future of streaming movies and TV shows.
Others noted that Paramount Global currently has two things Buffett covets in a stock — a low price-earnings ratio (it’s just four at this point) and a strong dividend that currently yields 5%. Whatever the reason, this is one stock that Buffett will likely need to hold onto for a while in order to generate a profit from it.
Charter Communications (CHTR)
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While not as well-known as the other stocks on this list, Charter Communications (NASDAQ:CHTR) is a telecommunications company that provides cable television and residential telephone services to its customers in 41 U.S. states. It’s the type of company whose strong regional presence and competitive strength in the markets in which it competes appeals to Buffett.
However, the stock has been an extremely poor performer in 2022, having fallen 50% on the year to $327 a share.
Part of the problem with CHTR stock is that the company is decidedly old school, since it’s offering cable TV and landline telephone services at a time when people are cutting cords and switching to online streaming and cell phones.
The company’s long-serving chief executive also recently announced his retirement. That said, Charter Communications is the type of sound company that Buffett tends to support. Despite its deflated share price, Charter Communications’ revenue rose 6.3% in the 12 months that ended in June, and the company’s earnings per share also improved in the last 12-months. Buffett will no doubt hope that the Street eventually prices these positive developments into the share price.
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Cloud-computing company Snowflake (NYSE:SNOW) is an odd holding of Warren Buffett’s for a few reasons. First of all, SNOW is a relatively young technology company, as it was founded in 2012, and it is not yet profitable.
Look at Buffett’s portfolio and you’ll see a list of mature, well-established companies, the vast majority of which are highly profitable. That’s because the Oracle rarely speculates on stocks. Also strange is that Buffett’s Berkshire Hathaway got in on the initial public offering (IPO) of Snowflake in September 2020 at the height of the Covid-19 stock mania, while Buffett has rarely bought stocks during their IPOs throughout his career.
SNOW stock is down 49% this year at $173.50 per share. The stock is also 30% lower than where it closed on its first day of trading following its 2020 IPO. The main reasons for the decline seem to be a continued lack of profits by Snowflake, as well as competitive pressures in the cloud-computing space.
Regardless, Buffett is estimated to have lost more than $35 million on SNOW stock after initially earning $1.9 billion following the frenzy that greeted the stock’s debut two years ago. While SNOW stock was not a smart investment for Buffett by most measures, there is speculation that one of Buffett’s lieutenant’s pulled the trigger on the name rather than Buffett himself.
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Undoubtedly one of the worst Warren Buffett stock picks this year is high-end furniture retailer Restoration Hardware (NYSE:RH), which is popularly known as RH.
In 2022, RH stock is down 55%. Over the last 12 months, the share price has declined 64%. Today shares of the company change hands at $244.50. It’s a far cry from two years ago when RH was one of the hottest stocks of the pandemic and trading at nearly $740 per share, or 200% higher than where it currently sits.
The sharp decline can be attributed to a slump in the company’s sales as people are no longer sheltering in place at home. Also playing a role in the stock’s decline are global supply chain problems that have impacted its merchandise.
Buffett began buying RH stock in November 2019 when the shares were trading right around $200 and rising quickly. He started his position with 1.2 million shares and steadily built it to 2.17 million, worth more than $520 million today. However, if Buffett isn’t already underwater with his RH investment, he surely will be if the stock continues trending lower in the coming months.
On the date of publication, Joel Baglole held long positions in AAPL, BAC and V. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
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