Warren Buffett

Warren Buffett makes all his money with just 11 stocks

Warren Buffett is having a much better year than most S&P 500 investors. And he can thank a handful of stocks for that.


Only 11 shares in Berkshire Hathaway‘s (BRKB) just announced its portfolio of 50 U.S.-listed companies, including western oil (OXY), Chevron (CLC) and McKesson (MCK) – are up this year, according to an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. This means that only 22% of its shares are up in this difficult year for the S&P 500.

It’s not a stellar performance. That’s a lower hit rate than the S&P 500, where more than 27% of stocks in the index are up this year. But the fact highlights the importance of Buffett’s fugitive winners this year. Berkshire Hathaway shares are up 2.5% this year, while the S&P 500 is down 17%.

The source of most of Buffett’s big wins

When you’re losing money on three-quarters of your stock, but still beating the market like Berkshire Hathaway this year, it’s worth seeing what’s working so well.

And for Buffett, there is no doubt what it is: energy. Buffett’s top two stocks this year come from the energy sector. And the energy sector is the only one of the 11 S&P 500 sectors that are up this year.

Energy is the third most weighted sector in Buffett’s portfolio, at 13%. Energy, on the other hand, only makes up 5% of the S&P 500, ranking it eighth among all sectors. And that’s enough to make up for the fact that Buffett’s two biggest individual bets, Apple (AAPL) and Bank of America (BAC), are both down about 16% this year.

Watch Buffett’s Big Winners

Some of Buffett’s energy stock picks have also been absolute home runs. Occidental Petroleum, a Houston-based energy explorer, is by far Buffett’s top stock this year, up more than 142%. It was an exceptionally good call, beating the 64% gain in ETF Energy Select Sector SPDR (XLE).

And he also added aggressively to the position. With a portfolio of $14.5 billion, Occidental is now Buffett’s sixth biggest bet. It’s right behind some of his perennial favorites like Coke (KO), which incidentally is also up this year, by almost 2%.

Berkshire Hathaway now owns more than 21% of Occidental.

Another of Buffett’s winning giants is an energy play: Chevron. The shares are up more than 54% this year. Buffett also bet big on this, amplifying the benefits. Berkshire Hathaway’s stake in the company is valued at more than $31 billion, making it the third-largest position in its portfolio.

Buffett’s winners: more than energy

That’s not to say energy is the only reason Buffett is having a better year than the S&P 500. McKesson, a service provider to the pharmaceutical industry, has seen its shares soar more than 46% this year. . With a position size of $1.1 billion, that’s not a huge bet for Buffett’s Berkshire Hathaway, but it’s not a tiny one either.

And Buffett is sticking to telecom stocks T-Mobile United States (TMUS) after finally throwing in the towel on his rival Verizon (VZ). And this is a good thing. Shares of T-Mobile — in which Buffett is still a relatively small investor, with less than 1% of shares outstanding — are up more than 27% this year.

But it’s important to note that it’s hard to assess Buffett’s record based on a single year, no matter how dramatic.

“Do you want to know why (Buffett) is one of the richest people in the world? Part of it, of course, is that he accumulated money at a high rate,” said Whitney Tilson of Empire Financial Research. “But most people don’t fully appreciate the second part quite as part of the equation: he did it for a long time. of time.”

But it’s still worth noting what works in a year like this for the world’s most famous investor.

Warren Buffett’s best actions this year

The Best Performing Stocks in Berkshire Hathaway’s Portfolio

Company Symbol Change since the beginning of the year Sector
western oil (OXY) 143.6% Energy
Chevron (CLC) 55.8 Energy
McKesson (MCK) 46.1 Health care
T-Mobile United States (TMUS) 27.5 Communication Services
Globe Life (GL) 20.1 finance
ActivisionBlizzard (ATVI) 11.0 Communication Services
Hooks (KR) 6.0 Basic consumption
Kraft-Heinz (CC) 5.2 Basic consumption
Coke (NOPE) 2.1 Basic consumption
Johnson & Johnson (JNJ) 1.9 Health care
marcel (MKL) 1.7 finance
Sources: S&P Global Market Intelligence, IBD

Follow Matt Krantz on Twitter @mattkrantz


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