The rule of thumb in investing is to diversify. Yet the most successful investor of all time shuns that rule and bets heavily on a few companies instead. Warren Buffett has almost 90% of his stock portfolio invested in just ten stocks.
Indeed his top 7 holdings collectively are worth about $250 billion and his #1 position represents about half of that amount. So what are Buffett’s top 7 holdings? In reverse order, here they are:
Berkshire Hathaway owns 4.3 million shares in Occidental Petroleum (OXY) stock, representing a 19.2% stake in the energy and oil company. The original shares were the result of a preferred stock investment. More recently, the shares have been converted to common stock.
Speculation is rife that Buffett will follow the same playbook with OXY as he did with BNSF (Burlington Northern) a decade and a half ago when he accumulated shares heavily and finally pulled the trigger and bought the whole company outright.
Buffett’s Occidental bet has been an enormous success. The company was on the verge of bankruptcy a few years ago after assuming massive debts when acquiring Anadarko Petroleum but now stands to boost cash flows from almost $4 billion a couple of years ago to nearly $20 billion this year.
Berkshire Hathaway acquired a $12.6 billion stake in Kraft Heinz (KHC) in 2015 when Kraft Foods and Heinz merged. This is one of the rare times that Buffett made a bad decision. In 2019, he admitted he had paid too much for the shares.
He still holds the shares, though. And by our estimates when running a cash flow analysis, Kraft Heinz has the potential to hit $48.31 per share, representing 27.1% upside at the time of research.
Berkshire Hathaway spent a paltry $1.3 billion a few decades ago to snap up about 11% American Express (AXP). Since then his investment in the company is up almost about 17x, representing an enormous winner for Buffett.
Not only did Buffett spot early the moat and brand advantages that American Express possessed, but he has also enjoyed the tailwinds from share buybacks that management has instituted in the intervening years, meaning his percentage ownership in the company has increased too.
By our estimates, fair value for American Express sits at $158 per share.
Berkshire Hathaway didn’t invest in Chevron (CVX) until 2020, but it’s committed to that decision over the last two years.
Buffett owns about $22 billion in Chevron stock. Unfortunately, Chevron hasn’t generated the returns many investors would expect. Buffett remains unfazed by the slow performance. He’s betting that high energy prices will lead to Chevron’s long-term financial success. Speculation is growing that oil prices could reach as high as $300 per share. If he’s right, Buffett will almost certainly be sitting on another massive winner.
From our calculations, Chevron has upside potential to $189 per share, representing a gain potential of 37%.
Coca-Cola (KO) is a massive earner that churns out impressive dividend payments and only has one major competitor.
Berkshire Hathaway bought its first Coca-Cola shares in 1988 and Buffett’s firm now enjoys a dividend payment annually that is equivalent to approximately 70% of the principal he first spent on the shares!
Today, Berkshire’s holdings in Coca Cola is worth approximately $25 billion and Coca Cola pays Berkshire a $700+ million annual dividend.
Bank of America
Berkshire Hathaway invested in Bank of America (BAC) when the financial crisis pushed the company to the brink of collapse. Buffett bought $5 billion in preferred shares. By now, the preferred shares have been converted to common stock, and their price has risen significantly, earning Buffett over a 6x return on his initial investment.
Today, we assess Bank of America to have around 27% upside to $41 per share based on a discounted cash flow forecast analysis, suggesting there’s even more tailwinds to support Buffett’s investment.
Buffett’s holding company, Berkshire Hathaway, has been buying Apple (AAPL) since 2016. It currently owns shares worth about $130 billion, making it Berkshire Hathaway’s biggest investment.
Buffett has famously said that Apple has enormous pricing power. Take a phone away from a person and see how much they would be willing to pay to get it back. When a company can increases prices and not hurt demand you know it has an extraordinary product. And that’s what Buffett believes Apple has – an exceptional product with massive pricing power.