Warren Buffett (Omaha, United States, 1930) has been listed as one of the richest people in the world for decades. According to the Forbes list, he is now in fifth place, with a net worth of 127,000 million dollars (about 115,000 million euros). His fortune is concentrated in his investment vehicle, Bershkire Hathaway. It is a conglomerate that is listed on the Stock Exchange and that brings together a hundred companies and shares. This week it carried out the largest operation of the last two years, with the purchase of the Alleghany insurer for 11,600 million dollars (10,537 million euros). After this acquisition, how is your portfolio?
The first thing to say is that Alleghany is a very small part of Berkshire Hathaway, which has a combined market value of $530 billion. The operation is explained by Buffett’s fondness for the insurance sector. Since the 1960s, the one known as the “Oracle of Omaha” (because of the success of his investments) began to buy insurance companies. The conglomerate used the strong generation of cash from the collection of premiums to buy companies at knockdown prices.
In addition, Alleghany CEO Joe Brandon ran one of Buffett’s reinsurance subsidiaries. And it has printed the management seal of Berkshire Hathaway on the insurer. On the other hand, Buffett has bought at a very good price.
But when looking at the current composition of Warren Buffett’s portfolio, one company stands out above all the rest: Apple. The 91-year-old investor started buying shares of the iPhone maker in 2016, regretting not getting in sooner. Since then, Berkshire Hathaway has acquired shares worth 31,089 million dollars. But the revaluation of Apple has been so spectacular that the participation in the apple company is already worth 161,000 million dollars. Consequently, in Berkshire Hathaway’s investee portfolio, the weight of Apple is enormous, already close to 50% of the total. Never in his career as an investor had Buffett been so focused on a stock. It is already the third largest Apple shareholder, behind only two asset management giants, BlackRock and Vanguard, which manage the funds of tens of millions of people.
OTHER BERKSHIRE HATHAWAY POSITIONS
- Insurance. It controls the insurer Geico (the second largest auto insurance company in the US), Gen Re (specializing in reinsurance, but also with life policies) and NRG (reinsurer in the Netherlands).
- Consumption. It also owns the battery manufacturer Duracell; Fruit of the Loom clothing store; Helzberg Diamonds jewelry stores; carpet manufacturer Shaw Industries; the Dairy Queen fast food and ice cream chain; the railway operator Burlington Northern Santa Fe and the chemical company Lubrizol.
- Cash. It has 144,000 million dollars of liquidity.
As for the rest of the portfolio, the main stocks are also highly concentrated. 13.6% is Bank of America. The Omaha investor became a shareholder in 2011, when the company’s shares were badly depreciated by the Lehman Brother financial crisis. It also maintains smaller investments in other US banks such as Bank of New York Mellon or US Bancorp. And also in the credit rating agency Moody’s.
Among Buffett’s large holdings, two of the oldest are the Coca-Cola Company and American Express, which he has held for more than 20 years. Between the two they add up to 15% of the portfolio. Somewhat less old is Kraft Heinz (2013) and it is one of the few Buffett bets that is now trading below the purchase price.
Warren Buffett and his right-hand man, Charlie Munger (98 years old) have always had a fondness for American companies. In addition to those mentioned, they also have holdings in General Motors, Chervron, Procter & Gamble, Johnson & Johnson… However, in recent years, the tandem of nonagenarians has begun a timid geographical diversification of Berkshire Hathaway’s investments.
In the summer of 2020, Buffett announced to the market the acquisition of shares of five of the largest financial conglomerates in Japan (Itochu, Marubeni, Mitsubishi, Mitsui & Co, and Sumitomo). He took 5% of the capital of each of them. Patiently and discreetly, over 12 months. The initial investment was just over 6,000 million dollars, and with good returns during the first months.
Earlier, in 2008, Buffett decided to invest in a Chinese company that makes electric cars, BYD. Over the years, the participation increased and it already controls 8% of that conglomerate. The figures of the pitch he has given are dizzying. The acquisition cost of the shares was 248 million dollars. Now they are worth 40 times more, close to 10,000 million dollars.
