Warren Buffett is perhaps the most famous investor in the world. Having earned the appellation “The Oracle of Omaha” thanks to his investing success through his company Berkshire Hathaway, Buffett now stands as the fifth-wealthiest person in the world, with a net worth just north of $119 billion.
Whenever Buffett speaks, investors around the world listen, as he dispenses financial wisdom via his trademark down-home, folksy style. If you’re looking to get some investment ideas for your own portfolio, it might be worthwhile to take a look at the sectors that Buffett actually invests in — listed below — to see if they’re a match for your own financial objectives and risk tolerance.
Financials have long been associated with Berkshire Hathaway, which has held shares in American Express for 29 years. Berkshire’s $25 billion position in American Express — representing more than 20% of that company’s outstanding shares — represents 6.9% of Berkshire’s entire equity portfolio.
That’s nothing compared to Buffett’s position in Bank of America, though, valued at over $32 billion and making up 8.9% of Berkshire’s portfolio. Numerous other financial names are sprinkled throughout the Berkshire portfolio, from Ally and Capital One to Citigroup, Mastercard, Visa and more.
Buffett has long been a fan of the energy sector, but he made headlines once again in 2022 when Berkshire Hathaway began aggressively buying stock in Occidental Petroleum, asking for and receiving regulatory approval to purchase up to 50% of the company’s shares. As of June 28, 2023, Berkshire Hathaway held 25.1% of Occidental’s outstanding shares. This represents 4.1% of Berkshire’s entire portfolio.
Berkshire Hathaway also holds a $20 billion position in Chevron, making up 5.6% of the company’s portfolio. In other words, just these two stocks already make up nearly 10% of Berkshire’s entire portfolio, and Buffett seems intent on picking up even more Occidental Petroleum.
One of Buffett’s most famous quotes is, “I think happiness makes an enormous amount of difference … in terms of longevity. I’m happier when I’m eating hot fudge sundaes or drinking Coke.” Buffett has long put his money where his mouth is, as Coca-Cola is Berkshire Hathaway’s oldest position, dating back 34 years.
Berkshire’s $24 billion position represents 6.8% of Berkshire’s entire portfolio and 9.2% of Coca-Cola’s outstanding shares. Berkshire also owns 26.5% of Kraft Heinz, with its $11 billion position representing 3.1% of Berkshire Hathaway’s portfolio. Collectively, consumer staples make up about 10% of the company’s investment portfolio.
Buffett has been famously ignorant of technology for his entire investment career. As one of Buffett’s ongoing mantras is that he won’t invest in things he doesn’t understand, the Berkshire Hathaway portfolio is notably missing the big tech names that typically dominate the news headlines, and even the market itself. However, something changed significantly in 2016, when Berkshire Hathaway first began picking up shares of Apple.
In one sense, Apple is the ultimate tech stock, as its groundbreaking innovations like the iPhone, the Mac and the iPad have helped make Apple the most valuable company in the entire world. But Buffett actually views Apple as a consumer products company — and he loves it. According to Buffett, Americans have such a cultish loyalty to their iPhones that they would be more likely to give up their second car than their iPhone.
Buffett has said that Apple is a “better business than any we own” at the company’s most recent annual meeting, and his portfolio backs up that sentiment. Apple makes up a whopping 45.1% of Berkshire’s entire portfolio, a position valued at roughly $163 billion. Berkshire also has a not-insignificant $4 billion position in HP Inc. Thus, technology is now Buffett’s favorite sector to invest in ironically, although he would not classify it as such.
Should You Follow Buffett’s Lead?
No one portfolio is suited for all investors, as they each have their own financial objectives and tolerance for risk. Overall, Buffett’s portfolio — while top-heavy — holds a heavy dose of more conservative, blue-chip companies that are dominant in their industries. Financials, consumer staples and energy companies generally pay sizable dividends and are less volatile than more speculative areas of the market, and this may or may not match what you’re looking for in your portfolio. And while Apple, for example, is a Wall Street darling and has proven to be an excellent stock to own over the long run, this doesn’t necessarily mean that you should make that one stock 45% of your entire position, as is the case with the Berkshire Hathaway equity portfolio.
Consider Berkshire Hathaway’s portfolio to be a good starting point to learn about what makes a company attractive to a long-term value investor like Buffett, then see if the individual holdings match your own personal tolerance for risk and performance expectations.
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