Warren Buffett and Berkshire Hathaway are once again outperforming the stock market. Apple’s a Big Reason, But These 10 Other Stocks Helped Too

During the long tech-driven bull market, you may have seen more than one article suggesting that Berkshire Hathaway CEO Warren Buffett’s investment style was no longer valid.

With Buffett heading the conglomerate’s annual meeting on April 30, this is a good time to take a fresh look at Berkshire’s performance. The notion that Buffett is out of date may itself be out of date.

The naysayers had their moments. After all, for five years until 2019, before fiscal and monetary stimulus in response to the pandemic distorted financial markets, Berkshire Hathaway BRK’s Class B shares
rose 51%, while the Dow Jones Industrial Average DJIA
returned 81% and the benchmark S&P 500 Index SPX
it yielded 74%, with dividends reinvested. (Berkshire Hathaway does not pay dividends.)

Over the five years to 2020, an incredible year for tech stocks, Berkshire’s Class B shares were up 76%, while the Dow Jones returned 98% and the S&P 500 103%.

Now look at a five-year chart showing the returns for all three through April 26, 2022:

set of facts

Berkshire has been ahead for five years. But a five-year snapshot doesn’t tell the whole story. Here are two tables showing the returns of all three for various periods.

First, total returns through April 22:

Total return – 2022 until April 26

Full return – 3 years

Full return – 5 years

Total return – 10 years

Total return – 15 years

Total return – 20 years

Berkshire Hathaway Inc. Class B

eleven%

54%

97%

311%

356%

611%

Dow Jones Industrial Average

-8%

3. 4%

77%

219%

269%

446%

S&P 500

-12%

49%

91%

263%

279%

477%

Source: FactSet

And now the average annual returns for various numbers of years through April 22:

Fund or index

Average return – 3 years

Average return – 5 years

Average return – 10 years

Average return – 15 years

Average return – 20 years

Berkshire Hathaway Inc. Class B

15.6%

14.6%

15.2%

10.6%

10.3%

DJ Industrial Average

7.8%

9.6%

9.7%

6.4%

6.2%

S&P 500

12.4%

11.8%

11.5%

7.1%

7.0%

Source: FactSet

Berkshire’s returns have outperformed the Dow and S&P 500 in all of the periods shown above, surprisingly in the longer periods.

Having a good 2022 while the broader market has slumped is, of course, an important part of the story.

One criticism of Buffett’s approach, especially during periods when Berkshire stock underperformed the broader market, has been the inability to make new acquisitions that are “big enough to move the needle,” because Berkshire Hathaway is such a large conglomerate. Its market capitalization is approximately $733 billion.

But Buffett spells out the company’s advantages in his annual letters to shareholders, including the “float” of its core insurance businesses and the high levels of free cash flow that he and his colleagues have emphasized when making acquisitions for decades.

You can read Buffett’s annual letters here, and they are instructive for any investor following any style. He also admits to making mistakes, including buying businesses that turned out to be “fringe,” as he wrote in the 2021 letter published in February.

Nobody is perfect. But you can see above that what may seem like an overly conservative investment style in a high-tech world can work well over long periods that include good and bad business cycles. And you should also keep in mind that no matter what new technology comes out, people and businesses still need insurance.

Berkshire Investment Portfolio

Publicly traded corporations that invest in the common stock of other companies, but have not incorporated those businesses in their own financial statements, are required by the Securities and Exchange Commission to report their stock holdings within 45 days of filing. end of each fiscal quarter. These are known as 13F presentations. Berkshire’s most recent 13F was filed on February 14 and listed holdings as of December 31.

Since then, Berkshire has built up a 14.6% position in Occidental Petroleum Corp.’s OXY.
Common actions.

For the most part, available Berkshire Hathaway stock portfolio information is as of December 31. Therefore, the following lists are as of that date. Berkshire is active, adding and cutting various positions in any given quarter.

According to Berkshire’s most recent 13F filing, the company owned 42 shares of common stock with a combined market value of $330.9 billion, according to stock price information provided by FactSet. The value of Berkshire’s 5.4% stake in Apple Inc. stock was $157.5 billion, or 48% of the total portfolio.

Here are the 11 stocks for which Berkshire’s holdings were worth at least $4 billion as of December 31:

Business

Heart

Berkshire Hathaway Holdings Value – December 31, 2021 ($Thousand)

Company market capitalization: December 31, 2021 ($ thousand)

Berkshire ownership stake

Apple Inc.

AAPL

$157,529

$2,913,284

5.41%

Bank of America Corp.

bac

$44,939

$364,110

12.34%

american express company

AXP

$24,804

$126,717

19.57%

Coca-Cola Co.

KO

$23,684

$255,787

9.26%

Kraft Heinz Co.

KHC

$11,690

$43,943

26.60%

Moody’s Corp.

MCO

$9,636

$72,609

13.27%

Verizon Communications Inc.

VZ

$8,253

$218,128

3.78%

US Bank

USB

$7,101

$83,289

8.53%

Chevron Corporation.

CLC

$4,488

$226,214

1.98%

Bank of New York Mellon Corp.

BK

$4,203

$47,964

8.76%

davita inc.

ADL

$4,106

$11,592

35.42%

Sources: Berkshire Hathaway 13F filing on February 14, 2022; set of facts

Click on the tickers to learn more about each company.

You should also read Tomi Kilgore’s detailed guide to the wealth of information for free on MarketWatch’s quotes page.

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