There are not many money managers who can enchant the attention of professional investors and every day as Berkshire Hathaway'S. (NYSE: BRK.A)(NYSE: BRK.B) Billionaire CEO, Warren Buffett. Since the properly named “Oracle of Omaha” as CEO of six decades ago, he has led the shares of Class and his company (BRK.A) to an impressive cumulative return of nearly 5,650,000%, such as the Closer closed on February 3 Feb 3.
Given Buffett's long -term success, investors are closely monitoring that he and his chief advisers, Todd Combs and Ted Weschler, buy and sell. After all, riding the oracle of Omaha Cattails has proved quite profitable for patient investors.
CEO of Berkshire Hathaway Warren Buffett. Image source: The Motley Fool.
What is arguably the biggest factor that has helped Buffett Run Circles around Wall Street is his Penchant for portfolio concentration. While Buffett oversees a 44 stock portfolio, $ 297 billion in Berkshire Hathaway, it has long been believed in giving more capital to work in its best ideas.
Currently, about two -thirds (nearly $ 195 billion) can be traced from $ 297 billion of Berkshire invested assets to five magnificent stocks.
For some time, technology stock Apple(NASDAQ: AAPL) is Warren Buffett's biggest holding in Berkshire Hathaway. Despite the fact that the Berkshire Head oversees the sale of more than 615 million shares of Apple from October 1, 2023 through September 30, 2024, the 300 million shares still owned by Berkshire equals $ 68.4 billion in market value.
Apple's success over the years has been driven by its innovation. This includes the physical products that have strived its brand with consumers, such as the best -selling iPhone (in the US), as well as developments outside the company box. For example, CEO Tim Cook leads an Apple shift to become a platform company. Emphasizing subscription services should lead to more consistent sales and cash flow, and build the company's active edge over time.
To build on this point, Apple is a recognized high value brand that generally has a loyal customer base. Buffett may not fully understand inside and out of how the iPhone works, but has previously chosen that it understands consumer purchasing habits and behaviors.
Buffett is likely to appreciate back a world -leading shares purchase program. Including Apple's latest quarterly report, the company closes in at $ 750 billion in repurchase aggregates shares since the start of a purchase program back in 2013. These backpacks have a positive impact on its earnings per share (EPS).
While Oracle Omaha has not purchased one share of credit service provider American Express(NYSE: AXP) After a longest holding Berkshire (since 1991)-he has worked his way up to the number 2 post in the Berkshire Hathaway portfolio and now accounts for sixth of invested assets.
What makes Amex, as American Express is commonly called, as a special company is its ability to benefit from both sides of the transaction counter. In the US, it is the third largest payment processor according to a credit card network purchase volume. Helping to facilitate transactions gain a predictable fee from traders and allows Amex to benefit from long economic expansion.
But American Express is also a lender. While not all payment processors are double dipping and acting as lenders, Amex's decision to provide credit lines to personal and business card holders gives it the ability to collect annual fees and/or interest income.
Historically Amex has also been given a crack for attracting higher income customers. Although the good to make it is not immune to economic decline, they are less likely than the average winner of changing their spending habits or failing to pay their bills during periods of minor agitation. By focusing on high winners, American Express can soften recession shot.
Image source: Getty images.
Financial It happens to be Warren Buffett's favorite sector to give his company's capital to work. While Buffett removed more than 266 million shares of Bank of America(NYSE: BAC) Stock since July 17, 2024, it still accounts for close to eighth assets invested.
The beauty of bank stocks like a bofa is that they are circular. While three -quarters of the whole recession since the end of World War II have been solved in less than a year, most economic expansion periods suffer for several years. This difference between recessions and expansion periods allows Bofa to grow its lending portfolio prudently over time.
Furthermore, Bank of America is the most sensitive to the interest of America's largest banks according to the total assets. When the Federal Fund was scrambling to get the overall inflation rate under control and the federal funds rate rapidly increased 525 base points between March 2022 and July 2023, no cash center bank had benefited more than a BOFA. With the nation's central bank now walking on egg shells as it tries to reduce interest rates, Bank of America will have enough time to produce very profitable loans.
Do not discount the Bofa Capital Return Program, either. The company's $ 1.04-the-area base annual dividend should generate nearly $ 797 million in income for Berkshire Hathaway in 2025. In addition, Bofa spends a pretty penny on buying shares of most years most years.
None of the 44 stocks in the Buffett portfolio supervising in Berkshire Hathaway has been games longer than the consumer staples giant Coca-cola(NYSE: KO). This marks the 37th year running he has been part of the Buffett portfolio, and has grown into the fourth largest holding of Berkshire.
What Oracle Omaha probably appreciates most about Coca-Cola is the predictability of its action results. As it has ongoing operations in all but three countries (Cuba, North Korea, and Russia), Coca-Cola can take advantage of higher growth opportunities in emerging markets, all in producing a steady cash flow in developed countries.
Coca-Cola also understands its customer very well. Its marketing team has embraced social media channels and the progress of artificial intelligence to tailor ads to younger users. Meanwhile, it has over a century of storytelling, including tying it into previous festivals, to press on as a means of contacting its mature customers. Put this together and you have a company that has been the most selected brand of retail shelves for 12 consecutive years, according to Kantar's “brand footprint” survey.
To keep with the theme, the Coca-Cola capital return program is at another level. While no public company can all over and Apple in the purchase section, only a handful of businesses can put ahead of Coke's streak of increasing its basic annual payment for a straight 62 years (and counting).
The fifth joint stock, with Apple, American Express, Bank of America, and Coca-Cola, accounts for two-thirds of Berkshire Hathaway's $ 297 billion portfolio, an integrated energy company Kevr(NYSE: CVX).
Although Chevron produces at the highest edges of its upstream drilling segment, and thus benefits when the price of crude oil and natural gas spot climbs, the “integrated” attitude on its operating model of ' the greatest importance. Chevron oversees transmission pipelines, chemical plants, and refineries, all of which can provide predictable operating cash flow and help compensate for reductions in the price of crude oil spot.
As well as having a good hedge, Chevron has gradually increased his production over time. CEO Mike Wirth believes that the company's Permist Basin output will grow 9% to 10% in 2025, with capital expenditure (CAPEX) coming in on a hub of $ 15 billion, which is extremely lower No $ 16.4 billion in Capex for 2024. This should. be a recipe for better operational cash flow and higher profits.
The cherry on top for Chevron is that it also fosters an impressive capital return program. Its board approved a shares repurchase program of $ 75 billion in 2023, and the company announced its 38th consecutive annual increase to its dividend last week.
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Bank of America and American Express are Motley Fool Money advertising partners. Sean Williams He has posts in Bank of America. The Motley Fool has jobs in and recommends Apple, Bank of America, Berkshire Hathaway, and Chevron. The fool has motley and Disclosure Policy.
