22 Mar

Is Berkshire’s Portfolio of Listed Securities Valuable?

WRITTEN BY Mohit Oberoi, CFA

Publicly traded securities

In his 2018 shareholder letter, Warren Buffett said, “Berkshire’s runner-up grove by value is its collection of equities, typically involving a 5% to 10% ownership position in a very large company.” Berkshire Hathaway’s (BRK-B) portfolio of publicly traded securities was valued at $173 billion at the end of the fourth quarter. The company earned a dividend of $3.8 billion from these companies last year. American Express (AXP), Apple (AAPL), Bank of America (BAC), Coca-Cola (KO), and Wells Fargo (WFC) contributed almost $3 billion of the dividend.

Is Berkshire’s Portfolio of Listed Securities Valuable?

Buffett

Buffett said, “All of our major holdings enjoy excellent economics, and most use a portion of their retained earnings to repurchase their shares. We very much like that: If Charlie and I think an investee’s stock is underpriced, we rejoice when management employs some of its earnings to increase Berkshire’s ownership percentage.” Buffett’s views on share buybacks have evolved over the years. Read How Warren Buffett’s Investment Philosophy Has Evolved to learn more.

Apple

Buffett surprised markets by not adding more Apple shares in the fourth quarter despite the 30% fall in its stock price. In an interview with CNBC, in response to a question on whether he would buy Apple “at $160 or something,” Buffett said that he wouldn’t. He said, “I’m always interested in lower levels in a number of stocks we own.”

Apple stock is above $190. Buffett, who has dabbled with tech names like IBM (IBM) and Oracle (ORCL), sees Apple as a consumer product company and not a tech company (QQQ).

Next, we’ll discuss Berkshire Hathaway’s other businesses.

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