Technology now accounts for half of Berkshire Hathaway's portfolio - the company headed by Buffett, followed by finance and energy.
Warren Buffett is one of the world's most successful investors. He is known as the "Sage of Omaha" for building the investment company Berkshire Hathaway. Buffett is currently the 6th richest person in the world, with an estimated fortune of 120 billion USD, according to Forbes.
Buffett's moves and words are always closely followed and imitated by investors around the world. If you are thinking about your portfolio, you can refer to the billionaire's favorite fields.
Finance
Warren Buffett at Berkshire Hathaway's shareholders meeting. Photo: Reuters
Finance has long been a favorite investment for Berkshire Hathaway. The company has held American Express for 29 years. Berkshire now owns more than 20% of the company, worth $25 billion. That represents 7% of Berkshire’s stock portfolio.
Still, that’s less than Bank of America. Berkshire owns more than $32 billion in U.S. bank stocks, or nearly 9% of its portfolio. It also has stakes in other big names in the financial industry, including Capital One, Citigroup, MasterCard, and Visa.
Energy
Energy is also a favorite sector of Buffett. The company of the world's sixth richest billionaire began investing in this sector in 2022, marked by the purchase of shares of oil and gas company Occidental Petroleum. By June 2023, Berkshire Hathaway owned more than 25% of Occidental shares, equivalent to 4.1% of their investment portfolio.
Berkshire Hathaway also holds $20 billion worth of Chevron stock, accounting for nearly 6% of its portfolio. Together, Occidental and Chevron make up about 10% of Berkshire's portfolio. Buffett has also made no secret of his intention to buy more Occidental stock.
Essential consumer goods
One of Buffett's most famous quotes is "I think happiness makes a huge difference in longevity. I'm happier eating ice cream and drinking soda." Berkshire has invested in Coca-Cola - one of the world's most famous beverage companies - for 34 years, with $24 billion in shares. This is equivalent to 9.2% of Coca-Cola's outstanding shares on the market.
Buffett's company also owns 26.5% of Kraft Heinz, worth $11 billion.
Technology
Buffett has historically avoided the technology sector, as he prefers not to invest in things he doesn't understand. However, that has also caused Berkshire to miss out on many opportunities with tech giants. Berkshire Hathaway only started buying Apple shares in 2016.
Apple is a technology company, with popular products such as the iPhone, Mac, iPad. However, Buffett thinks of Apple as a consumer goods company. He said many Americans are so loyal to Apple that they would give up buying another car, but not give up their iPhone.
At Berkshire Hathaway's annual meeting in May 2023, the investing legend said Apple was "the best investment we've ever made." Apple currently accounts for 45% of Berkshire's portfolio, worth nearly $163 billion. Berkshire also has a $4 billion investment in computer maker HP.
So should investors invest like Buffett? In fact, no portfolio is suitable for everyone. Because each person has different financial goals and risk tolerance.
Buffett's portfolio is largely made up of well-established, large-value companies that dominate their industries. Financial, consumer staples, and energy stocks are also typically less volatile and pay large dividends.
Apple may be a Wall Street favorite, but that doesn’t mean investors need to build half their portfolios around the tech company like Berkshire. Experts say Berkshire’s portfolio is a good starting point to get a sense of what makes a company attractive from the perspective of investors like Buffett, and then adjust your investment choices based on your expectations and risk tolerance.
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