Fool Podcasts. New Ventures. Search Search:. Todd Campbell tmfebcapital. Aug 22, at AM. Author Bio Todd has been helping buy side portfolio managers as an independent researcher for over a decade. In , Todd founded E. Capital Markets, LLC, a research firm providing action oriented ideas to professional investors. Follow ebcapital. Key Points Warren Buffett is one of the world's wealthiest people.
These are the Oracle of Omaha's five biggest stock picks. Image source: Motley Fool. Image source: Getty Images. Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Join Stock Advisor Discounted offers are only available to new members. Stock Advisor launched in February of A Berkshire Hathaway Inc. B Berkshire Hathaway Inc. Related Articles. The remaining stake of 1. Buffett's investment in the Class A shares dates to the fourth quarter of Berkshire Hathaway picked up the Class C shares, which have no voting power, in the first quarter of The sales amounted to 3,, shares, which comprised a mere 0.
No wonder, then, that Buffett has taken a hatchet to this Malone-linked bet. B exited its entire stake of , shares in the biotechnology firm, which it first bought in the fourth quarter of It was never much of a position for the holding company to begin with. Indeed, although Buffett has a history of making bets on the healthcare sector, the small position size always signalled that this might have been a pick from co-portfolio managers Ted Weschler or Todd Combs.
Biogen's fate is most heavily tied at the moment to its Alzheimer's treatment, Aduhelm. And lately, those fates haven't looked so good. The Food and Drug Administration in July called for an investigation into the recent approval of the Aduhelm and later narrowed its indications for use. The stake made sense at the time. After all, Buffett has long been a fan of the paint industry; Berkshire Hathaway bought house-paint maker Benjamin Moore in Buffett has now become the third-largest investor by virtue of owning about 8.
RH operates retail and outlet stores across the U. It also owns Waterworks, a high-end bath-and-kitchen retailer with 14 showrooms. While brick-and-mortar retailers have struggled mightily over the past few years thanks in part to the rise of e-commerce, RH has found success catering to the upper crust. And that success continued throughout the COVID pandemic as Americans, forced to work from home, decided to spend on improving their environs.
RH shares have more than tripled since Jan. Buffett hasn't said much about RH, making it difficult to tell whether this is his idea, or a project of one of his lieutenants, Ted Weschler or Todd Combs. But the stake does fit broadly with Buffett's worldview. Buffett stocks tend to be bets on America's growth, which is exactly what a bet on housing and housing-related industries is.
As we mentioned previously, Buffett loves the insurance business — he just hasn't been too keen on owning mere equity stakes in them. But in Q1 of this year, the industry accounted for two of his five buys, and his lone new position. Like most insurance firms, you won't necessarily expect profits to grow in a perfectly straight line year after year. But revenues have improved without interruption over the past four years, and net income is up in three of the past five years.
That operational strength has led to superior returns against both the market and its peers. Berkshire hasn't exactly bet the farm on Aon. The 4. B's position by more than a fifth after adding a huge chunk in the prior quarter too.
Berkshire Hathaway turned a few heads during the fourth quarter of , when it initiated its But given what was to come, it now looks like a savvy pick. After all, the massive supermarket chain treated shareholders well during the worst of the pandemic and has continued to outperform in Kroger operates roughly 2, retail food stores operating under such banners as Dillons, Ralphs, Harris Teeter and its namesake brand, as well as 1, gas stations and even jewelry stores under banners including Fred Meyer Jewelers and Littman Jewelers.
B added That followed the purchase of With nearly 62 million shares total, Berkshire Hathaway is the third-largest owner of Kroger shares, with its 8. It's only a middle-of-the-pack position at just 0. But it certainly belongs. Unlike other recent new positions such as Amazon. The pharmaceutical giant — in which Buffett still owns 9.
As a result of the move, Berkshire found itself owning 1. Note well that Buffett sold more than half of Berkshire's stake in Merck over the course of Q2. Organon, accounting for 0. Whether Buffett keeps it remains to be seen. Skip to header Skip to main content Skip to footer.
Home investing stocks. This demonstrates the company's ability or inability to increase shareholder value. Do keep in mind, however, that a stock's past performance does not guarantee future performance. The value investor's job is to determine how well the company can perform as it did in the past. Determining this is inherently tricky.
But evidently, Buffett is very good at it. One important point to remember about public companies is that the Securities and Exchange Commission SEC requires that they file regular financial statements. You might initially think of this question as a radical approach to narrowing down a company. Buffett, however, sees this question as an important one. He tends to shy away but not always from companies whose products are indistinguishable from those of competitors, and those that rely solely on a commodity such as oil and gas.
If the company does not offer anything different from another firm within the same industry, Buffett sees little that sets the company apart. Any characteristic that is hard to replicate is what Buffett calls a company's economic moat , or competitive advantage. This is the kicker.
Finding companies that meet the other five criteria is one thing, but determining whether they are undervalued is the most difficult part of value investing. And it's Buffett's most important skill. To check this, an investor must determine a company's intrinsic value by analyzing a number of business fundamentals including earnings, revenues, and assets.
And a company's intrinsic value is usually higher and more complicated than its liquidation value, which is what a company would be worth if it were broken up and sold today. The liquidation value doesn't include intangibles such as the value of a brand name, which is not directly stated on the financial statements. Once Buffett determines the intrinsic value of the company as a whole, he compares it to its current market capitalization —the current total worth or price. Well, Buffett's success, however, depends on his unmatched skill in accurately determining this intrinsic value.
While we can outline some of his criteria, we have no way of knowing exactly how he gained such precise mastery of calculating value. As you've probably noticed, Buffett's investing style is like the shopping style of a bargain hunter. It reflects a practical, down-to-earth attitude. Buffett maintains this attitude in other areas of his life: He doesn't live in a huge house, he doesn't collect cars, and he doesn't take a limousine to work. The value-investing style is not without its critics, but whether you support Buffett or not, the proof is in the pudding.
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