The majority of Berkshire Hathaway's (NYSE: BRK-A) (NYSE: BRK-B) stock portfolio was hand-selected by CEO Warren Buffett himself. This is especially true of the portfolio's largest stock positions. With that in mind, here are Berkshire's 10 largest positions, according to the latest available information -- and why Warren Buffett might like each one.
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|BRK.A||BERKSHIRE HATHAWAY INC.||306,500.10||+8,953.10||+3.01%|
|BRK.B||BERKSHIRE HATHAWAY INC.||204.48||+5.70||+2.87%|
Note: Numbers of shares owned current as of Sept. 30, 2017, and market values are current as of Dec. 8, 2017.
1. Kraft Heinz
|KHC||KRAFT HEINZ COMPANY||47.53||+0.45||+0.96%|
Berkshire's $25.5 billion, 325.6 million-share Kraft Heinz (NASDAQ: KHC) position is a result of the merger of Heinz (which Berkshire owned) with Kraft Foods. Berkshire's stake represents 26.7% ownership of the combined operation. Buffett is likely a fan of the synergies created by combining two giant food companies, as well as the portfolio of high-value brand names owned by Kraft Heinz, including Oscar Mayer, Maxwell House, and Lunchables, in addition to its two namesake brands.
2. Wells Fargo
|WFC||WELLS FARGO & COMPANY||50.01||+0.78||+1.58%|
Wells Fargo (NYSE: WFC) remains one of Berkshire's largest stock positions, even after the infamous fake-accounts scandal that sent many investors running for the exits. With 464.2 million shares worth $27.5 billion, Berkshire owns about 9% of the banking giant. Berkshire has actually reduced its Wells Fargo position in recent quarters, but this was more of a regulatory compliance issue than anything related to the business. Despite the numerous scandals plaguing the bank, Buffett has called Wells Fargo an "incredible institution" and says that it's still a good long-term investment.
Apple (NASDAQ: AAPL) is a relatively new addition to Berkshire's portfolio, as the position has been built up within the past two years. As of the end of 2017's third quarter, Berkshire owns 134.1 million shares of Apple with a market value of $22.7 billion. While Buffett has traditionally avoided tech stocks, it's not difficult to see why he might like Apple. The company has a fantastic balance sheet, one of the world's most valuable brand names, and extremely "sticky" products, meaning that Apple customers tend to remain Apple customers.
A longtime Buffett favorite, both as an investment and as a product, Coca-Cola (NYSE: KO) is Berkshire's fourth largest investment. The 400 million shares in Berkshire's portfolio are worth about $18.1 billion. Coca-Cola has numerous competitive advantages that Buffett loves. To name a couple, the company's world-famous brand gives it pricing power, and its vast distribution network gives it cost advantages unmatched by competitors. Plus, the business is easy to understand and easy to run-- two other qualities Buffett loves. In fact, Buffett has said that a ham sandwich could run Coca-Cola.
5. Bank of America
|BAC||BANK OF AMERICA CORP.||29.30||+0.31||+1.07%|
While Bank of America (NYSE: BAC) is technically the newest addition to Berkshire's stock portfolio out of these 10, it's important to mention that Buffett actually invested in the bank several years ago. However, the original investment was in the form of preferred stock and warrants to buy common shares, which were recently exercised. Berkshire now owns 679 million shares of Bank of America, worth $19.7 billion as of this writing.
6. American Express
|AXP||AMERICAN EXPRESS COMPANY||100.48||+0.99||+1.00%|
American Express (NYSE: AXP) is a longtime Buffett favorite. Berkshire currently owns 151.6 million shares of the credit card giant, with a total market value of $14.9 billion. American Express has a valuable brand, an affluent cardholder base that gives it pricing power over its rivals, and a closed-loop payment network that allows it to profit from transaction fees as well as interest from its cardholder balances.
7. Phillips 66
A relatively new entry to Berkshire's portfolio, Phillips 66 (NYSE: PSX) is Buffett's largest energy bet. With 80.7 million shares worth $8.1 billion, Berkshire owns nearly 16% of Phillips 66. Unlike many oil companies, Phillips 66 is a downstream operator, meaning it makes its money by refining, marketing, and processing petroleum products. Because of this, its profits aren't too dependent on the price of crude oil, which has allowed the company to thrive even as oil prices have remained depressed for several years.
8. International Business Machines (IBM)
|IBM||INTERNATIONAL BUSINESS MACHINES CORP.||123.82||+1.63||+1.33%|
IBM (NYSE: IBM) was a much larger position in Berkshire's portfolio until recently. Over the past couple of years, Berkshire has chosen to reduce its exposure to IBM from 81 million shares just a couple of years ago to 37 million shares today. Still, with a market value of more than $5.7 billion, Berkshire's stake in IBM remains one of its biggest. While Buffett likes IBM's business model and the high switching costs incurred by its customers, competition in the industry has heated up, and Buffett has reportedly revalued the stock downward.
9. U.S. Bancorp
|USB||U.S. BANCORP INC.||50.22||+0.47||+0.94%|
You may have noticed that Buffett's stock portfolio is bank-heavy. The fourth financial stock in the top 10, U.S. Bancorp (NYSE: USB) makes up $4.7 billion of Berkshire's portfolio value with an 85.1 million share position. There's not much to dislike about U.S. Bancorp. The bank has a well-established track record of smart risk management, which allowed it to emerge from the financial crisis even stronger than it went in, and it's consistently the most profitable of the big U.S. banks.
Finishing off the top 10 is credit rating agency Moody's (NYSE: MCO). Berkshire's 24.7 million-share position is worth almost $3.8 billion, representing a 12.9% stake in the company. Buffett loves the high barriers to entry in Moody's business, which have resulted in few competitors and strong pricing power. Also, the business generates lots of capital and requires little money to grow -- a combination Buffett loves.
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Matthew Frankel owns shares of American Express, Apple, Bank of America, and Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Apple, Berkshire Hathaway (B shares), and Moody's. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends American Express. The Motley Fool has a disclosure policy.