Warren Buffett and Berkshire Hathaway once again outperform the stock market. Apple is a big reason, but these 10 other stocks also helped

During the long tech-driven bull market, you may have seen more than one article suggesting that Berkshire Hathaway CEO Warren Buffett’s investment style was no longer valid.

With Buffett leading the conglomerate’s annual meeting on April 30, it’s a good time to take a fresh look at Berkshire’s performance. The idea that Buffett is outdated can itself be outdated.

Opponents have had their moments. After all, for five years until 2019 – before fiscal and monetary stimulus in response to the pandemic distorted financial markets – Berkshire Hathaway Class B shares BRK.B,
+0.15%
rose 51%, while the Dow Jones Industrial Average DJIA,
+0.57%
returned 81% and the benchmark S&P 500 Index SPX,
+0.80%
yield of 74%, dividends reinvested. (Berkshire Hathaway does not pay dividends.)

For five years to 2020 — an incredible year for tech stocks — Berkshire’s Class B shares were up 76%, while the Dow Jones returned 98% and the S&P 500 returned 103%.

Now look at a five-year chart showing returns for all three through April 26, 2022:

set of facts


Berkshire has been ahead for five years. But a five-year snapshot doesn’t tell the whole story. Here are two tables showing the returns for the three for different time periods.

First, the total returns through April 22:

Total Return – 2022 through April 26 Total return – 3 years Total return – 5 years Total return – 10 years Total return – 15 years Total return – 20 years

Berkshire Hathaway Inc. Class B

11%

54%

97%

311%

356%

611%

Dow Jones Industrial Average

-8%

34%

77%

219%

269%

446%

S&P500

-12%

49%

91%

263%

279%

477%

Source: FactSet

And now the average annual returns for various numbers of years up to April 22:

Fund or index

Average return – 3 years Average return – 5 years Average return – 10 years Average return – 15 years Average return – 20 years

Berkshire Hathaway Inc. Class B

15.6%

14.6%

15.2%

10.6%

10.3%

Medium Industrial DJ

7.8%

9.6%

9.7%

6.4%

6.2%

S&P500

12.4%

11.8%

11.5%

7.1%

7.0%

Source: FactSet

Berkshire’s returns have beaten those of the Dow Jones and the S&P 500 for all the periods shown above, strikingly for the longer periods.

Having a strong 2022 as the overall market declined is, of course, an important part of the story.

One criticism of Buffett’s approach – particularly during periods when Berkshire shares have underperformed the broader market – has been his failure to make new acquisitions “big enough to move the needle” because Berkshire Hathaway is such a big conglomerate. Its market cap is approximately $733 billion.

But Buffett explains the company’s upsides in his annual shareholder letters, including the ‘free float’ of its core insurance business and the high levels of free cash flow he and his colleagues have touted in acquisitions. over the decades.

You can read Buffett’s annual letters here, and they’re instructive for any investor following any style. He also admits to making mistakes, including buying companies that turned out to be “marginal”, as he wrote in the 2021 letter published in February.

Nobody is perfect. But you can see above that what might seem like an overly conservative style of investing in a high-tech world can play out well over long periods that include good and bad economic cycles. And you should also keep in mind that regardless of new technologies, individuals and businesses always need insurance.

Berkshire Investment Portfolio

Publicly traded companies that invest in the common stock of other companies, but have not included those companies in their own financial statements, are required by the Securities and Exchange Commission to report their stock holdings within 45 days of the end of each fiscal quarter. These are known as 13F deposits. Berkshire’s most recent 13F was filed Feb. 14 and listed holdings as of Dec. 31.

Since then, Berkshire has acquired a 14.6% position in Occidental Petroleum Corp.’s OXY,
+0.44%
ordinary actions.

Most of the information available on Berkshire Hathaway’s stock portfolio is as of December 31. The following lists are therefore as of this date. Berkshire is active, adding and removing various positions during a quarter.

According to Berkshire’s latest 13F filing, the company held 42 common shares with a combined market value of $330.9 billion, according to stock price information provided by FactSet. The value of Berkshire’s 5.4% stake in shares of Apple Inc. was $157.5 billion, or 48% of the total portfolio.

Here are the 11 stocks for which Berkshire’s holdings were worth at least $4 billion as of December 31:

Company Teleprinter Value of Berkshire Hathaway holdings – December 31, 2021 (in millions of dollars) Company market capitalization – December 31, 2021 (in millions of dollars) Stake in Berkshire

Apple Inc.

AAPL,
+0.40%

$157,529

$2,913,284

5.41%

Bank of America Corp.

BAC,
+0.69%

$44,939

$364,110

12.34%

American Express Co.

AXP,
-1.06%

$24,804

$126,717

19.57%

Coca-Cola Co.

KO,
+1.12%

$23,684

$255,787

9.26%

Kraft Heinz Co.

KHC,
+1.16%

$11,690

$43,943

26.60%

Moody’s Corp.

MCO,
+1.31%

$9,636

$72,609

13.27%

Verizon Communications Inc.

VZ,
-0.33%

$8,253

$218,128

3.78%

American bank

usb,
-0.18%

$7,101

$83,289

8.53%

Chevron Corp.

CLC,
-0.02%

$4,488

$226,214

1.98%

Bank of New York Mellon Corp.

BK,
-0.54%

$4,203

$47,964

8.76%

Da Vita Inc.

DVA,
+0.10%

$4,106

$11,592

35.42%

Sources: Berkshire Hathaway 13F filing on February 14, 2022; set of facts

Click on the tickers to learn more about each company.

You should also read Tomi Kilgore’s in-depth guide to the Wealth of Free Information on the MarketWatch quotes page.

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