Berkshire Hathaway‘s (NYSE: BRK.A)(NYSE: BRK.B) Warren Buffett has said: “Diversification is protection against ignorance. It makes little sense if you know what you are doing.” While having a meaningful degree of portfolio diversification is likely a smart move for most investors, it’s clear Buffett is enormously confident in the Berkshire managers’ and analyst teams’ abilities to pick winners.
Given that Berkshire has absolutely crushed the market since Buffett became the company’s leader in 1965, it would be nearly impossible to argue that his confidence is misplaced. Read on for a look at Berkshire Hathaway’s five largest stock holdings (based on the company’s recent 13F filing), which accounted for roughly 76% of its direct equity ownership positions.
Apple (NASDAQ: AAPL) stands as, by far, the largest holding in the Berkshire Hathaway stock portfolio. At current prices, the tech giant’s stock accounts for roughly 38.9% of the investment conglomerate’s equity holdings. Buffett’s company began investing in the iPhone maker back in 2016, and the combination of capital appreciation for existing shares in the portfolio and additional stock purchases elevated it to Berkshire’s top equity position.
Apple’s dominance in the mobile market has made it one of the world’s most profitable businesses. According to analysis from Counterpoint Research, the iPhone company generated 85% of global profits on smartphone sales in last year’s fourth quarter. If you think about how many device manufacturers are out there and how competition and commodification trends, Apple’s dominance in mobile is nothing short of incredible — and it doesn’t look like the tech leader will be ceding dominance in the space any time soon.
2. Bank of America
Early in 2011, it looked like Buffett might have been done with Bank of America (NYSE: BAC) stock for good. The publication of Berkshire’s 13F filing for 2010’s fourth quarter revealed that Berkshire had sold off the entirety of its position in the bank stock and taken a substantial loss exiting the position. But the investment conglomerate was back to buying BoA shares before 2011 was over.
With BoA facing pressures from the 2011 debt-ceiling crisis and lingering pressures from the recent financial crash and recession, Buffett proposed a deal to BoA that would provide the struggling financial giant with an injection of new capital. Berkshire bought $5 billion worth of preferred stock and received stock warrants allowing the holding company to purchase 700 million shares of the banking giant’s common stock at $7.14 per share.
Roughly six years later, BoA stock was trading above $24 per share, and Buffett moved to exercise the warrants. The purchase immediately made Berkshire Hathaway Bank of America’s largest shareholder, and it remains so to this day. BoA stock accounts for approximately 11.2% of Berkshire’s stock portfolio as of this writing, and Berkshire owns roughly 12.6% of the banking company’s outstanding shares.
Berkshire Hathaway initiated a position in Chevron (NYSE: CVX) stock in 2020 and poured billions of dollars in additional investment into the stock in 2022. That proved to be a great move.
Berkshire’s large position in Chevron played a huge role in the investment conglomerate’s market-beating performance over the last year. Spurred by high oil prices, the energy giant wound up the best-performing component of the Dow Jones Industrial Average index in 2022.
While falling gas prices caused Chevron’s share price to dip around 5% year to date in 2023 and lag the Dow’s roughly 3% gain across the stretch, the energy company has still been crushing the index since the beginning of last year. Even with the valuation dip in 2023, Chevron stands as Berkshire’s third-largest holding and accounts for roughly 9.8% of the company’s equity portfolio.
Warren Buffett has never been an official spokesperson for Coca-Cola‘s (NYSE: KO) soft drinks. However, he’s made enough public appearances sipping on Cokes and Diet Cokes through the years that the beverage giant has certainly gotten some promotional mileage from it. The Oracle of Omaha also likes the company so much that he’s said he would never sell a share of its stock, and it currently makes up 8.5% of Berkshire Hathaway’s stock portfolio.
Coca-Cola also has one of the best dividend growth streaks of any publicly traded company. At 60 years of consecutive annual payout growth, the company is a decade past the 50-year marker needed to join the illustrious ranks of the Dividend Kings. Only nine public companies have longer dividend growth track records, and Buffett and other shareholders will very likely be treated to another dividend increase when the company publishes its upcoming fourth-quarter report.
5. American Express
Berkshire currently owns roughly 20% of American Express‘s (NYSE: AXP) stock, and that ownership stake will likely increase even if the investment conglomerate never buys another share. American Express has been on a substantial buyback spree in recent years, buying back and retiring nearly a third of its outstanding shares over the last decade.
In addition to growth in its number of active members and total transaction volume conducted across its network, retiring shares has been a substantial positive catalyst for earnings-per-share growth. The company has also returned value to Buffett and other shareholders in the form of dividends and raised its payout by 160% over the last decade.
Based on its stock price as of this writing, AmEx accounts for 7.5% of Berkshire’s equity holdings.
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American Express is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool recommends the following options: long January 2024 $47.50 calls on Coca-Cola, long March 2023 $120 calls on Apple, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.