Top ten holdings
In this part, we’ll discuss how Warren Buffett’s top ten holdings fared in the fourth quarter. The holdings are based on Berkshire Hathaway’s (BRK-B) third-quarter 13F. Apple (AAPL), which was Buffett’s top holding at the end of the third quarter, saw a selling spree in the fourth quarter. Apple saw its market capitalization fall below $700 billion for the first time since 2017. The stock fell 30.1% in the fourth quarter.
Looking at Buffett’s other bets, in the financials space, Bank of America (BAC) and Wells Fargo (WFC) lost 16.4% and 12.3%, respectively. American Express (AXP) and U.S. Bancorp (USB) lost 10.5% and 13.5%, respectively. Moody’s (MCO) and Goldman Sachs (GS) lost 16.2% and 25.5%, respectively. JPMorgan Chase (JPM), which Berkshire Hathaway added to its portfolio in the third quarter, lost 13.5% in the fourth quarter.
While Buffett has been increasing his exposure to the banking sector (XLF), the sector has been out of favor with markets. In 2018, we were in a rising interest rate environment that’s generally beneficial for the banking sector. However, the flattening yield curve dented the sentiment. Banks usually borrow short term, while lending is for the long term. The slowing economic growth outlook doesn’t bode well for the sector.
Among Buffett’s other major holdings, Kraft Heinz (KHC) lost 21.9%, while Coca-Cola (KO) rose 2.5%. While Berkshire Hathaway’s outperformance compared to the S&P 500 (SPY) was significant before 2000, the outperformance has narrowed since then. Read Can Warren Buffett Outperform the Markets in 2019? to learn more.
Next, we’ll discuss how Berkshire Hathaway’s latest stock picks have performed.