Warren Buffett Top 5 Stocks

Warren Buffett made considerable changes to his Berkshire Hathaway investment portfolio throughout 2020. The company scaled down some investments, cut-out others altogether, and increased more profitable holdings to take advantage of what was a fairly unique and unpredictable year.

But which companies made it into the legendary investors top 5 picks? 

Berkshire Holds A Massive $110 Billion Of Apple Stock

After many years of famously avoiding almost any investment in technology company stock, Warren Buffett finally entered the fray with his purchase of 10 million Apple shares in 2016.

It might seem somewhat ironic now, but since then his stake in AAPL has grown to be Berkshire Hathaway’s largest single holding, with a total investment of $36 billion now accounting for over $110 billion, or 44%, of the investment company’s portfolio.

Even having sold off over 57 million AAPL shares in the last quarter of 2020, Buffett’s enthusiasm for the company doesn’t appear to be on the wane. He still holds a total of 5% of all of APPL stock, with only BlackRock and Vanguard, titans of the huge index fund ecosystem, holding more.

With AAPL’s push into the wearables market and the emerging 5G sector, there’s plenty more upside opportunity for the electronics company in the future. Having recently taken his profit from a 430% investment, don’t be surprised to see Buffett buying back in when the time is right.

Buffett’s 2nd Largest Holding: $40 Billion BofA Stock

Warren Buffett spent a large part of 2020 selling off many of his interests in various bank-stocks, including holdings in big name firms such as Goldman Sachs (GS) and JPMorgan Chase (JPM).

But one company he stayed loyal to was Bank of America. Buffett has previously praised the management at BAC, and his association with the company goes back to 2011, when he stepped in to rescue the firm in the wake of the Great Recession.

Indeed, Berkshire Hathaway is currently BAC’s largest shareholder, owning around 14% of the company’s outstanding shares.

Buffett’s involvement with BAC has been lucrative over the years, too. Part of the deal with the bank in 2011 guaranteed that Berkshire Hathaway got a slate of preferred shares and warrants that gave him the option to buy back common stock at a lower price further down the line.

That right was exercised in 2017, netting him a $12 billion profit off of his initial $5 billion investment.

And despite Buffett’s general distaste for bank stocks last year, the Oracle of Omaha actually added BAC shares to his portfolio. To date, Berkshire owns over 1.01 billion shares in BAC worth an estimated $40 billion.

Berkshire Holds $21.8 Billion Of Amex Stock

As one of Warren Buffett’s longest held investments, American Express (AXP) is also one of his most well-performing stocks. Berkshire Hathaway first took a stake in the multinational financial services company in 1963, and he has held faith with the firm ever since. 

And “faith” is probably the right word; although AXP has yielded a 1,260% return over the last 25 years, Buffett has never been shy in stepping in and helping the company out when the going gets tough.

Indeed, his early investment in AXP was at a time when the credit card company desperately needed capital – it was struggling under the weight of what was at the time a pretty serious financial scandal, involving Tino De Angelis and some fraudulent vegetable oil futures – and he even helped out again during the financial crisis of 2008.

Like with many of Buffett’s greatest investments, the key to AXP’s value was in its competitive advantage. Buffett saw that AXP’s business model incentivized customer spending through its unique suite of premium discounts, and he figured that anything that got users spending more would see sales necessarily increase.

This approach also informed many of his future investments, with an appreciation for customer-centric business strategies taking a primary role in his decision whether to invest in a particular company or not.

The bet on his highly favored AXP certainly paid off. Buffett now owns over 150 Million AXP shares, with Berkshire Hathaway being the firm’s largest holder of stock. 

Buffett’s Favorite Stock: Coca-Cola

One of Warren Buffett’s key investment strategies right from the beginning of his career has been to target companies that pay a healthy dividend, sometimes even at the expense of a company’s price performance over the years.

Coca-Cola is just one such company. The drinks manufacturer, despite underperforming the S&P 500 over the last decade, has still increased its annual dividend payout for the last 58 years and counting.

Buffett first bought into the Coca-Cola brand back in 1988, not long after the infamous Black Monday stock market crash of the previous year. He got the company’s shares at an attractive discount since most publicly traded businesses were sold off cheap because of the downturn.

Recognizing the significance of Coca-Cola’s immense industry moat, and the fact that the firm was so undervalued at the time, Buffett went on to make Coca-Cola his third largest holding at the time, with 400 Million shares accounting for 8.13% of his total portfolio.  

Kraft Heinz Is A Huge Holding For Buffett: $13 Billion

The merger of Kraft Foods with the American food processing giant Heinz to create Kraft Heinz in 2015 is one small blot in Warren Buffett’s near-perfect play-book. 

The deal that saw these two megaliths combine was almost solely to blame for a non-cash loss on Berkshire Hathaway’s accounting sheet in 2018 of around $3 billion.

In 2019, KHC further recorded a write down of $15 billion. Buffett admitted that he made a mistake with the KHC merger, and the company lost 50% of its price since 2015.

However, a resurgence of sorts has taken place in the fortunes of the company, and the outlook isn’t nearly as bad as it was a couple of year’s ago. Two good quarterly reports of late saw the firm beat on earnings expectations, and Michael Burry’s Scion Asset Management is looking to capitalize on KHC’s depressed price with a bull call spread in the options market.

Plus, the sale of KHC’s Planters peanuts brand for more than $3 billion has helped scale down debt for the company. Indeed, Buffett has commented that debt restructuring will be critical to KHC’s recovery in the future.

The investment in KHC represents nearly 5% of Buffett’s Berkshire Hathaway portfolio, and with 325 million shares he’ll be hoping the recovery continues apace. A 39% return over the last year should give some measure of hope, though, for sure.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.