The 3 Best Warren Buffett Picks of All Time (And the 3 Worst)

As Berkshire Hathaway (NYSE:BRK-B) CEO Warren Buffett steps to the side to make way for a new chief executive at the investing conglomerate, investors of all stripes will certainly be lining up to learn whatever lessons can be learned from his six decades leading one of the world’s most respected and renowned companies. 

I’ve personally read a few Warren Buffett biographies, and they’re worth reading. What’s interesting is that there are a number of similar themes throughout (depending on which version investors read first), with Buffett certainly showing a willingness to open up about his successes (and failures).

It’s definitely much easier for any of us to talk about our successes, and how innovative, intelligent and inventive we were in getting across the finish line with whatever goal it is we’re talking about. In terms of pure capitalism and shareholder returns, Berkshire Hathaway has to be one of the greatest examples of success in the financial markets there is.

Here are three of Buffett’s best picks, followed by three of his investments he’d probably like to have back.

Buffett Top Picks

Apple (AAPL)

When historians do an analysis of how Buffett was able to accumulate shares of technology giant Apple (NASDAQ:AAPL) at roughly 10-times earnings in Q1 2016, and then sell Apple for well more than 30-times earnings in 2024 and 2025, his aura will certainly be cemented. In my mind, this more recent trade (which resulted in Apple becoming Berskhire’s largest holding overall, as well as the largest company in the world by market cap), is his best. 

Buffett’s holdings of Apple stock have continued to be reduced, as the Oracle of Omaha appears to see storm clouds on the horizon. But the fact that he’s already made multiples of his initial investment (and the shares he still owns are worth more than his initial investment), this nearly decade-long buy and hold could go down as one of the best-timed trades in history.

American Express (AXP)

One of Buffett’s longest-term holdings, and perhaps the pick that’s most indicative of his long-term strategy, is American Express (NYSE:AXP). Notably, Buffett began investing in American Express in the 1960s, with the stock continuing to remain a core holding to today. It’s rare that any investor will be able or willing to stick with a core position as long as this, but that’s what makes Warren Buffett truly special.

His strategy of buying insurance and various financial institutions at deep discounts to their assets, and then simply holding them for a very, very long time to let time and compounding do their thing, is remarkable. American Express has turned into a quality behemoth in the world of credit. For those thinking about a company that’s worth holding for another 60 years, American Express would be atop my list – the fact that Buffett had this foresight so long ago is incredible. 

Coca-Cola (KO)

The one company I think of in terms of a brand that would represent Buffett (besides Berkshire of course) is Coca-Cola (NYSE:KO). The fact that Buffett’s table each year at his annual meeting in Omaha is lined with red cans of the most iconic cola brand in the world should be no surprise to those who follow Buffett. Coca-Cola remains among the brands he’s been most enamored by since childhood, and it’s this brand and loyal customer base that really forms the core of his thesis around holding this stock

Warren Buffett began buying Coca-Cola in the 1980s, with this stock also likely to go down as one of his most successful investments of all time. From a dividend perspective alone, the fact that Berkshire is able to bring in more than $800 million in dividend income alone from this one position is incredible, particularly when one considers that Buffett invested around $1.3 billion to acquire the 400 million shares that now pay out more than $800 million a year. That’s a great return on investment, if you ask me.

Buffett’s Worst Picks

Berkshire Hathaway

Any investor who’s read even a part of any of Buffett’s various biographies (or his annual letters for that matter) will note that Berkshire Hathaway itself has been dubbed the Oracle of Omaha’s worst investment by Buffett himself. This purchase of the struggling New England textile mill in the 1960s was one that Buffett has bemoaned on a number of occasions, often touting the decision to keep the Berkshire Hathaway name as one which should remind him of his ability to make mistakes each and every day.

I don’t know about you, but I don’t like getting reminded of my mistakes on a daily basis. But in the world of investing, where mistakes are very commonplace, perhaps this is one of Buffett’s keys to long-term success. His ability to take what he could from his losers, and invest the rest in his winners (to create something marvelous) is truly incredible. 

Dexter Shoe Company 

Another investment Buffett has bemoaned over the years was his 1993 purchase of Dexter Shoe. The retailer of an assortment of popular footwear brands became appealing to Buffett who liked the company’s fundamentals and business model (it’s one he could understand). This seemed like such a good deal that Buffett did what he doesn’t often do, and offered to pay with Berkshire stock for the transaction. 

As it is, Dexter Shoe’s competitive advantage dissipated over time, and the company eventually dissolved. This investment was one of Berkshire’s more notable “zeros,” though the fact that Buffett paid all stock for this deal still haunts him to this day. His view was that the valuable chunk of Berkshire that was given away likely resulted in this deal becoming a multi-billion-dollar mistake

ConocoPhillips (COP)

Warren Buffett has been a long-term investor in a range of energy-related companies for a long time. However, ConocoPhillips (NYSE:COP) could be considered Buffett’s worst investment from at least a timing standpoint. 

Buffett began accumulating ConocoPhillips in 2008 just ahead of the great energy price crash of the Great Recession. Buffett’s view that we will require energy for a very long time, and companies like ConocoPhillips that are vertically integrated in this space make sense as viable long-term holdings turned out to be right. But in this case, the entry price Buffett got into his position at didn’t make sense. His willingness to be patient with offloading some of this position helped some, but this is one position I think Buffett would have been much better off avoiding until energy prices bottomed. 

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