Many investors closely follow the investment moves of the largest investors. The reason for this is logical, one way to learn to invest is to watch people who manage to invest successfully for many years. In this article, we will analyze the portfolio of Warren Buffet in 2021, that is, his company Berkshire Hathaway.
Shares of Berkshire returned 20% annually between 1965 and 2020 compared to 10.2% of S&P 500 gains during that period.
To see what Warren Buffet has in his portfolio you need to take a look at form 13F which was publicly released this year. Form 13F is a quarterly report that is required from all institutional investment firms with at least 100 million dollars of assets under management.
Largest position – Apple (AAPL)
Warren Buffet’s largest position by far within its investment company Berkshire Hathaway is Apple. Apple makes 43,61% of Berkshire’s portfolio and it owns 887 million shares which are worth 117 billion dollars.
Although Apple is known to everyone, we will briefly go through the most important characteristics. The main thing a company sells is the iPhone. That makes up 50% of their net sales. They also sell Mac and iPad which makes 10,4% and 8,6% of the net sales.
Furthermore, there is a newer segment which is wearables and home accessories that makes up 11%, Lastly, the services side of the business (iTunes, app store, apple music, etc) makes up 19,57% of net sales.
Since this is the biggest company in the world, it is valued at more than 2,15 trillion dollars. The price of the individual stock is 130 dollars a share with earnings of 4,45 dollars. The value of the stock has risen very nicely in the last five years, from $ 23.90 as of June 1, 2016, to today’s value which is an increase of more than 5 times.
Apple has a very strong business model that is based on innovation and consumer-centric devices. They offer easy-to-use designs, privacy, security, and quality. People are loyal to the brand and love their products.
Second largest position – Bank of America (BAC)
Bank of America makes 11,34% of the portfolio of Warren Buffet in 2021. This investment is valued at 30,6 billion dollars.
Bank of America is an American multinational investment bank. They also offer financial services. In short, they are in the loan business, banking services, investing, asset management, and other financial-related services.
The price of Bank of America is affordable to a wider circle of investors. They sell at 42 dollars a share with earnings of 2,33 dollars. As a result, their P/E ratio of 18 is pretty low by today’s standards. An additional nice thing that is acquired by owning a stock is the payment of a dividend. It currently stands at 0,72 dollars which is an annual yield of 1.71%.
Buffet has been in banking stocks for a long time. Certainly, he understands this business. However, in these uncertain times, the banking sector will be tested and time will only show whether this investment will pay off.
Third largest holding – Coca Cola (KO)
Warren Buffet’s Berkshire Hathaway holds 8,13% of the portfolio in the company Coca-Cola. He owns 400 million shares worth 21,9 billion dollars.
It is interesting how Buffet’s stocks operate simple business models. In the case of Coca-Cola, they distribute drinks around the world and using strong marketing, sell them. Coca-Cola owns more than 3500 beverages and 500 brands.
Share price of Coca-Cola is currently at 54 dollars. Earnings per share are 1,67 dollars. In the last five years, although it has had several periods of ups and downs, it has managed to rise from $ 45 to today’s price.
One of the interesting things about Coca-Cola is its dividend payment. They pay a dividend of 3.08% and have increased it for 58 years. It might be one of the safest dividend-paying stocks.
American Express (AXP)
In fourth place is American Express with 6,8% of the total stock portfolio. He owns 151,6 million shares with a total value of 18,3 billion dollars.
American Express Company is an American international corporation that provides financial services. It is headquartered at 200 Vesey Street in New York State. The company was founded in 1850 and is one of thirty companies in the Dow Jones index.
The share price of American Express is 159 dollars, while earnings per share are 6,10 dollars. As a result, the P/E ratio is 26,06 dollars which seems like a good price for a company like this. Looking at the stock price as of July 1, 2016, the stock has risen from $ 60.76 which is an increase of 161%.
Kraft Heinz (KHC)
Buffet owns 325,6 million shares worth of 11,3 billion dollars. This makes up 4,2% of his portfolio.
Kraft Heinz is a food company and the third-largest food and beverage company in North America. Also, they are the fifth-largest food and beverages company in the world. They make 26 billion dollars in sales of which is 9,2 billion dollars gross profit.
Kraft Heinz has had tough times over the past few years. On May 1, 2017, they were selling for over 90 dollars a share. Since then, they got down dramatically. The reason for that is the poor earnings they had which was even negative in one period. However, today, they pay a nice dividend yield of 3,68%, and earnings have gone up a bit.
Verizon Communications (VZ)
The portfolio of Warren Buffet in 2021 has a position of Verizon Communications that makes a total of 3,19% of the portfolio and is worth 8,6 billion dollars.
Verizon Communications is one of the world’s leading providers of technology, communications, information, and entertainment products, and services. It provides products and services to consumers, businesses, and governments.
The stock sells for 58,74 dollars a share. It has done well in the last couple of years going up from June 1, 2016, the stock went up from 55,84 dollars to the price it is today. That is not so much an increase.
However, Buffet further increased its stakes by 151.45% in Q4 2020 which means it sees something in this company.
Moody’s Corporation (MCO)
Moody’s Corporation makes up 2,65% of Berkshire’s portfolio in total value of 7,1 billion dollars.
It is holding company for Moody’s Investors Service and Moody’s Analytics. Moody’s Investors Service provides investors with credit ratings, risk analysis, and research for securities and governments. Moody’s Analytics provides research for economic analysis and risk management.
The stock price for Moody’s corporation is 334,5 dollars. Earning per share is 10,72 dollars. In the last five years, the stock has progressed very well. From the price of 93.7 from June 1, 2016, it jumped by 257% to today’s price.
As well as the business models of other financial companies, it will be interesting to see how they will behave in the future. Their business model might be tested in these tough economic conditions.
US Bancorp (USB)
US Bancorp makes up 2,26% of the portfolio of Warren Buffet in 2021 with total value of 6,1 billion dollars.
It is an American banking holding company. It is the fifth-largest banking institution in the United States that was founded in 1929. They offer diversified financial services consisting of lending and depository services, cash management, foreign exchange. Also, the company offers additional financial services such as credit card services, mortgage banking, insurance, brokerage, and leasing.
The current share price is 61,37 dollars with earnings of 3,79 dollars. P/E ratio at 16,20 can be a signal as a possible buying opportunity for some investors. The stock has risen 52% since June 01, 2016, from the previous 40 dollars.
DaVita Inc. makes the ninth-largest position in the Buffet portfolio. The total value that Berkshire has in this company is 4.2 billion dollars and that makes 1,57% of Berkshire’s portfolio.
DaVita provides kidney dialysis services for patients suffering from chronic kidney failure or end-stage renal disease.
The stock has been going up recently, and in the last 5 years, it has risen from 77 dollars to today’s amount of 126,80 dollars. The P/E ratio of the stock is 19,60 which is considered reasonable for such a company.
Apparently, with this stock, Warren Buffet has diversified its risk into healthcare. Usually, this sector performs well in recession and does fine in other economic conditions. The reason for this is because people still need healthcare in a good and bad economy.
Chevron Corporation (CVX)
Berkshire owns 48 million shares worth 4,1 billion dollars and that makes up 1,52% of his portfolio.
Chevron Corporation is an integrated energy company that produces and transports crude oil and natural gas. Furthermore, the company refines and distributes fuels. It is also involved in chemical and mining operations and energy services.
The current price of 110 dollars and earnings per share is negative -4,12 dollars. As of June 2016, the price had even risen slightly, from 104,83 dollars at the time.
Summary of a portfolio of Warren Buffet in 2021
I showed you the 10 biggest positions which make 85% of his portfolio. The other 15% are very small positions which you can take a look at up-to-date 13F filing for Berkshire Hathaway on the SEC website.
Portfolio of Warren Buffet in 2021 – Sector weightings
Also, to further understand what Warren Buffet is investing in, let’s look at the sector allocation of the buffet portfolio in the chart below.
Technology is the buffet in the first place, which is logical given the position in Apple. One of the patterns you may have noticed by analyzing the portfolio of buffets is that he likes financial companies. Thus, among its largest positions, it holds shares of Bank of America, American Express, Moody’s Corporation, and US Bancorp.
Besides stocks, It is interesting how the firm has a big pile of cash waiting to be invested. Although he has always kept billions in cash, ready to deploy during dips, Warren Buffett now sits on more than $146 billion in cash. Maybe he is waiting for the stock market crash and make a deal of a century.
what the buffet is up to and what it will buy, we will find out more in the coming period and quarterly report.