In this article we’ll dive into the Warren Buffett Stock Portfolio: Top 10 Stock Picks. For the Oracle of Omaha’s top stock picks, check out the Warren Buffett Stock Portfolio: Top 5 Stock Picks.
Apple Inc. (NASDAQ:AAPL), The Coca-Cola Company (NYSE:KO), and Bank of America Corporation (NYSE:BAC) are some of the gigantic stock positions owned by billionaire investing icon Warren Buffett’s holding company Berkshire Hathaway.
92-year-old investing legend Warren Buffett is still going strong as the CEO of his $700 billion holding company Berkshire Hathaway, which he’s helmed for close to six decades. During that time, Berkshire Hathaway has generated brain-melting returns of over 3.64 million percent, meaning $100 invested in Berkshire in 1965 would’ve turned into more than $3.64 million today.
Not surprisingly, Buffett himself is one of the richest men in the world, with a personal fortune estimated by Forbes at $110 billion, making him the sixth-richest person in the world. Buffett could in fact be significantly wealthier than that, but has donated nearly $50 billion worth of his own shares in Berkshire Hathaway to various charitable causes over the years, including to the Bill & Melinda Gates Foundation Trust, which is managed by Michael Larson.
While Buffett maintains the same buy-and-hold investment philosophy that has underpinned much of his success over the years, his targets have changed considerably. Tech stocks now dominate Berkshire’s 13F portfolio, accounting for 44% of its 13F AUM. One tech stock in particular accounts for the lion’s share of that amount, while Buffett also made another notable tech addition to Berkshire’s portfolio during Q3.
The bulk of Berkshire’s remaining 13F assets are distributed primarily between three other sectors, energy, finance, and consumer staples, the latter two of which dominated Berkshire’s sector allocation for many years, accounting for as much as 85% of the holding company’s assets. In the case of energy stocks, Berkshire has invested more heavily in them this year than it has in decades, with its prior noteworthy forays into the sector coming in 2008 and 2013.
Unlike several other prominent money managers, Buffett hasn’t shown any bearishness in the current economic environment when it comes to pulling Berkshire’s assets out of the equities market. The firm’s 13F AUM rose slightly in Q1 and did decline by about 17% during Q2, but that was about in line with the market’s overall performance.
The firm’s 13F AUM was relatively flat quarter-over-quarter during Q3, dipping slightly to $296 billion. Berkshire added three new holdings to its 13F portfolio during the quarter, while selling off one former position. Even then, the latter move was due to the company in question, STORE Capital Corporation (NYSE:STOR), being acquired during the quarter.
Now then, let’s take a look at the top ten stock picks from Warren Buffett’s 13F portfolio as of September 30, which the investing legend has hundreds of billions of dollars riding on.
The following data is gathered from Berkshire Hathaway’s latest 13F filing with the SEC. We follow hedge funds like Berkshire Hathaway because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q3 2022 reporting period.
Warren Buffett Stock Portfolio: Top 10 Stock Picks
10. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Value of Berkshire Hathaway‘s 13F Position: $4.12 Billion
Number of Hedge Fund Shareholders: 90
Bank of America Corporation (NYSE:BAC), Apple Inc. (NASDAQ:AAPL), and The Coca-Cola Company (NYSE:KO) are some of the long-term cornerstones of Warren Buffett’s portfolio. One of the newest additions to his portfolio is Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), which Buffett’s holding company bought over 60 million shares of during Q3. TSM shares jumped by 10.5% on November 15 following the reveal of Buffett’s position.
Buffett wasn’t the only hedge fund manager buying shares of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) during Q3, as the stock ended the quarter at an all-time high in terms of hedge fund ownership among the select group of funds tracked by Insider Monkey’s database. Ray Dalio’s Bridgewater Associates and Stanley Druckenmiller’s Duquesne Capital are two other prominent investors that took stakes in TSM during the quarter.
Given Buffett’s huge stake in Apple, it’s perhaps somewhat overdue that he also invests in one of the company’s primary chip suppliers in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), which generates about a quarter of its revenue from Apple. TSM’s trailing twelve month (TTM) revenue has soared to $71.7 billion from less than $40 billion in 2020. Analysts are warning about weakness in the semiconductor market next year, with Gartner predicting a 3.6% decline, which is in stark contrast to the sector’s 26.3% growth in 2021. Those fears are weighing on TSM shares, which have slumped by 38% this year. Longer-term though, which is what Buffett is more interested in, Taiwan Semiconductor looks like a winner, especially if VR takes off in the years to come.
Baron Funds also likes Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s long-term growth outlook, as it detailed in its Q3 2022 investor letter:
“Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) detracted from performance due to the global macroeconomic slowdown and softening demand for consumer electronics. We retain conviction that Taiwan Semi’s technological leadership, pricing power, and exposure to secular growth markets, including high-performance computing, automotive, and IoT, will allow the company to deliver strong revenue growth over the next several years.”
9. Activision Blizzard, Inc. (NASDAQ:ATVI)
Value of Berkshire Hathaway‘s 13F Position: $4.47 Billion
Number of Hedge Fund Shareholders: 96
Berkshire Hathaway trimmed its Activision Blizzard, Inc. (NASDAQ:ATVI) position by 13% during Q3, ending the quarter with over 60.1 million shares of the video game developer and publisher, which is best known for its Warcraft, Diablo, Call of Duty, and Overwatch series. Hedge fund ownership of ATVI has risen for three straight quarters, climbing by 32% during that time.
Buffett first took a stake in Activision Blizzard, Inc. (NASDAQ:ATVI) during the final quarter of 2021 and more than quadrupled the size of his ATVI holding during the following quarter, the same one in which it was announced that Microsoft Corporation (NASDAQ:MSFT) would acquire the company for $68.7 billion. It’s unknown whether or not Buffett had already purchased most of those Q1 shares before the announcement, but regardless, he clearly likes Activision’s stable of renowned series and the company’s strong sales and profits, though it’s stumbled somewhat on that front this year against tough pandemic comps.
That proposed deal has been approved in some countries, but faces antitrust challenges in others, including the United States. The Federal Trade Commission appears intent on challenging the deal and blocking one of the largest tech companies and one of the three primary video game console manufacturers from acquiring one of the world’s largest game publishers. It’s been reported that Microsoft will make numerous concessions to try and see the deal through to completion, which includes licensing Call of Duty games to Sony consoles for at least ten years.
Cooper Investors revealed why it missed out on the M&A premium on Activision Blizzard, Inc. (NASDAQ:ATVI) shares in its Q2 2022 investor letter:
“Activision Blizzard, Inc. (NASDAQ:ATVI) – our investment preceded news that the company was under investigation for workplace bullying. When it became clear management had misled the market on the extent of the problem we sold, led by our principles of Responsible Investing. We did not benefit from the subsequent M&A premium paid by Microsoft.”
8. Moody’s Corporation (NYSE:MCO)
Value of Berkshire Hathaway‘s 13F Position: $6 Billion
Number of Hedge Fund Shareholders: 63
Berkshire’s position in Moody’s Corporation (NYSE:MCO) was left unchanged during Q3 at nearly 24.7 million shares. The value of the holding dipped by just over $700 million during the quarter and has fallen by more than $3.6 billion through September as MCO shares slumped by 38% during the first nine months of 2022.
Buffett traditionally loves companies with big moats, or competitive advantages, which is why Visa Inc. (NYSE:V), Mastercard Incorporated (NYSE:MA), and American Express Company (NYSE:AXP) all feature prominently in his portfolio. Moody’s Corporation (NYSE:MCO) is another company in that same vein, being one of the two primary credit ratings agencies and having a virtually unassailable position in that market in relation to any would-be upstarts.
That alone doesn’t make a company valuable, and it’s true that Moody’s core business is struggling this year due to less debt issuance given the current market environment. That segment of its business will eventually rebound along with the market however, and Moody’s has some other growing businesses that are picking up some of the slack in the meantime, as its Analytics segment grew revenue by 18% year-over-year in Q2.
Hedge funds were collectively bailing on Moody’s Corporation (NYSE:MCO)’s during Q2, but began buying back into the stock in Q3. Shares hit a 2-year low during the latest quarter, which may have prompted several hedge funds to go bargain hunting in anticipation of the bottom having been reached. Daniel S. Och’s Sculptor Capital and Jim Simons’ Renaissance Technologies were among the funds to add MCO to their portfolios during Q3.
7. The Kraft Heinz Company (NASDAQ:KHC)
Value of Berkshire Hathaway‘s 13F Position: $10.9 Billion
Number of Hedge Fund Shareholders: 41
Warren Buffett’s position in The Kraft Heinz Company (NASDAQ:KHC) has remained unchanged since the third quarter of 2015, when he helped facilitate the merger of Kraft and Heinz alongside Jorge Paulo Lemann’s 3G Capital (the two firms had owned Heinz since 2013). The position has been one of Buffett’s biggest mistakes to date, having lost over $12 billion worth of its value in the seven years since the merger.
Buffett hasn’t shown any indications that he’s going to bail on his investment in The Kraft Heinz Company (NASDAQ:KHC) any time soon, as he told CNBC back in 2019 that while he may have made a mistake on the price he paid for the investment, he will nonetheless be happy to still own the stock five to ten years from now. Under CEO Miguel Patricio, who was appointed to the role in 2019, the company has undertaken several initiatives to improve its brand mix, labeling, and advertising, with mixed results. Its strong brand recognition has given it some pricing power in the current inflationary environment, but sales volumes did decline somewhat in Q2.
There was a mild hedge fund exodus from The Kraft Heinz Company (NASDAQ:KHC) during 2016 and 2017, with ownership of the stock having remained relatively stable since. Ken Griffin’s Citadel Investment Group and Cliff Asness’ AQR Capital Management were some of the other major stakeholders in Kraft Heinz as of September 30.
6. Occidental Petroleum Corporation (NYSE:OXY)
Value of Berkshire Hathaway‘s 13F Position: $11.9 Billion
Number of Hedge Fund Shareholders: 79
Closing out the first half of Warren Buffett’s top stock picks is Occidental Petroleum Corporation (NYSE:OXY), which the billionaire money manager raised his stake in by 23% during Q3, ending the quarter with over 194 million shares.
Occidental Petroleum Corporation (NYSE:OXY) is one of those energy industry additions to Buffett’s portfolio this year, having been added to it in the first quarter. He’s further added to his stake over each of the following two quarters. It’s not his first interaction with the company however, as he made a $10 billion preferred investment in it in 2019, which pays out an 8% annual dividend to Berkshire.
The company plans to partially redeem that in the near future after having successfully paid off a big chunk of its debt load this year, with the company projecting that it will have shaved over $10 billion in debt off its balance sheet by year’s end. That will allow the company to redeem some of that preferred equity and return more money to shareholders next year, which is a win/win situation for Buffett.
Hedge fund ownership of OXY has risen during seven of the past eight quarters to hit an all-time high during Q3. Glenn Russell Dubin’s Highbridge Capital Management and Dmitry Balyasny’s Balyasny Asset Management were among the funds to add Occidental to their 13F portfolios during the latest quarter.
The Smead Value Fund discussed the performance of Occidental Petroleum Corporation (NYSE:OXY) and some of its other stock picks in the fund’s Q3 2022 investor letter (and yes, it should totally change its name to the Jed Clampett Fund):
“Our top-performing stocks in the quarter includes Occidental Petroleum (NYSE:OXY). Oil and gas have been the best game in the stock market town this year and it was a pleasant surprise to see home builders pick up even with dour news on interest rates and the economy. For the first three quarters of the year, we should change the name of our fund to the Jed Clampett Fund. Occidental Petroleum (NYSE:OXY), was one of the standouts. Up through the bear market came a “bubblin’ crude!”
See how many tens of billions Warren Buffett has invested in The Coca-Cola Company (NYSE:KO), Bank of America Corporation (NYSE:BAC), and Apple Inc. (NASDAQ:AAPL) by clicking the link below for the second half of this article.
Click to continue reading and see the Warren Buffett Stock Portfolio: Top 5 Stock Picks.
Disclosure: None. Warren Buffett Stock Portfolio: Top 10 Stock Picks is originally published at Insider Monkey.