For nearly six decades, Berkshire Hathaway has been under the helm of CEO Warren Buffett, often referred to as the Oracle of Omaha. Buffett’s tenure has resulted in an impressive 4,450,000% aggregate return in the company’s Class A Shares on the NYSE. As a savvy investor, Buffett’s stock picks are closely observed by investors around the world, eagerly anticipating his and his team’s investment moves. Yet, the stock he most frequently invests in might come as a surprise.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
Persistent Interest in Prominent Stocks
Buffett and his team have been expanding their investment in several well-known stocks. Berkshire Hathaway files Form 13F with the Securities and Exchange Commission, shedding light on its quarterly investment activities. The company’s portfolio, as of Jan. 12, constituted $361 billion of invested assets across approximately 50 stocks, some of which have been recurrently augmented over recent years.
One such stock interest is in the energy company Occidental Petroleum (NYSE: OXY), which has captivated Buffett and his investment duo, Todd Combs and Ted Weschler, over the past two years. The company’s purchase of over 243.7 million shares of Occidental Petroleum common stock totals a stake exceeding $14.1 billion.
The team’s frequent investment in Occidental Petroleum likely stems from their expectation of sustained or increased crude oil prices, driven by global supply constraints caused by underinvestment during the pandemic and geopolitical uncertainties.
Another recurrently preferred stock is tech giant Apple (NASDAQ: AAPL), which Buffett praised at Berkshire’s annual shareholder meeting, citing it as “a better business than any we own.” With an ever-growing stake in Apple, the company accounts for nearly half of Berkshire’s invested assets. Apple’s strong market presence, consistent innovation, and capital-return program make it a compelling investment choice.
Image source: Getty Images.
Consistent Long-term Purchases
Buffett’s strategic investments are unveiled through Berkshire Hathaway’s 13F, providing insights into the stocks and industries that capture his and his lieutenants’ attention. Continued purchases of specific stocks, such as Apple and Occidental Petroleum, underscore Buffett’s confidence in their long-term potential as valuable additions to his portfolio.
Warren Buffett’s Love Affair With Berkshire Hathaway Stock
Warren Buffett’s investment strategy is like a well-crafted novel; a tale that’s been spun for decades, continually evolving, yet grounded in timeless principles. What’s more, it’s not just the story he tells through his investments, it’s the characters themselves – the stocks.
The Indomitable Berkshire Hathaway
Berkshire Hathaway, like an ancient redwood, is an unyielding presence in Buffett’s portfolio, even among newer investments. Since July 2018, Warren Buffett has repeatedly exhibited his affection for a stock that fills him with enough pride to prompt consistent, almost monthly, purchases. What is this stock? It’s none other than his very own company, Berkshire Hathaway.
Change of Tides
July 17, 2018, marked a turning point. Until then, Berkshire’s stock had never met the criteria for share repurchases, as it had not traded at or below 120% of its book value. However, that day, the company’s board introduced changes that granted Buffett and his late confidant, Charlie Munger, greater flexibility in authorizing buybacks. This freedom was contingent on Berkshire Hathaway holding at least $30 billion in cash, cash equivalents, and Treasuries, and the duo deeming their own stock as fundamentally undervalued.
A Torrent of Buybacks
Since this pivotal amendment, Berkshire Hathaway has seen consecutive quarters of share repurchases, culminating in an astounding 21 quarters. To put it into perspective, over the past five-plus years, share repurchases have barely ever found a month devoid of their presence. In that span, more than $72 billion worth of Berkshire Hathaway stock has found its way back into the embrace of its parent company, largely due to the discernment of Warren Buffett and Charlie Munger.
Rewarding Long-Term Shareholders
Share buybacks have been touted by Buffett as a direct mechanism to reward long-term investors. As Berkshire does not offer dividends, this strategy allows steadfast shareholders to see a steady increase in their ownership. Furthermore, the reduction in outstanding shares, combined with stable or growing net income, translates to a climb in earnings per share, making Berkshire’s stock even more appealing to value-focused investors.
What Lies Ahead?
As 2024 unfolds, there’s no stock that arouses more confidence in Warren Buffett than his very own company. Berkshire Hathaway is beckoning, with arms wide open, to its master financier. It’s a sentiment that encapsulates Buffett’s unwavering trust in the company and the sheer brilliance of its future potential.
When considering investing in Berkshire Hathaway, think of it not as merely buying a stock, but as entering a hallowed hall of wisdom where the Oracle of Omaha wields his legendary financial acumen.
The Motley Fool Stock Advisor may have its reservations, but would you bet against a love story so enduring and compelling?