When Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett shares insights, investors listen closely. Known as the “Oracle of Omaha,” Buffett has achieved a remarkable cumulative return of over 5,570,000% on his company’s Class A shares (BRK.A) across six decades.
Buffett’s investment strategies are well-documented. In his annual letters to shareholders and at Berkshire’s annual meetings, he outlines his approach to building wealth on Wall Street while managing emotions. As a value-oriented, long-term investor, Buffett concentrates on companies with sustainable competitive advantages and strong leadership.
Wondering where to invest $1,000 today? Our analysts have just unveiled the 10 best stocks to buy right now. Check out these 10 stocks »
Managing a diverse portfolio of 44 stocks worth $296 billion, determining which holdings Buffett favors can be challenging.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
Apple, AmEx, and Bank of America: Major Holdings but Not Buffett’s Top Pick
It may seem logical that Berkshire Hathaway’s largest market value holdings reflect Buffett’s highest confidence, but that’s not always true.
Tech giant Apple (NASDAQ: AAPL) has consistently been Berkshire’s largest investment and is highly regarded by Buffett. Beyond its status as the leading smartphone brand in the U.S., Apple boasts a world-class capital-return program, with over $725 billion in stock repurchased since 2013, enhancing earnings per share (EPS).
However, Buffett and his investment team, including Todd Combs and Ted Weschler, have sold more than 615 million shares of Apple from October 1, 2023, to September 30, 2024. Even if this selling was for tax reasons, it casts doubt on Apple being Buffett’s top choice.
Next is American Express (NYSE: AXP), now ranked second in Berkshire’s portfolio. Buffett labeled AmEx as an “indefinite” holding last year. The company benefits from payment processing fees from merchants and annual fees and interest income from cardholders, suggesting strong overall performance.
However, it has been a considerable time since Buffett last increased his position in American Express. If AmEx were truly his preferred investment, one might expect more purchases.
The third-largest position, Bank of America (NYSE: BAC), reflects a pattern similar to Apple. Buffett has praised the company’s management, and BofA gained significantly from the Federal Reserve’s intense rate-hiking period from March 2022 to July 2023.
Nevertheless, since July 17, 2024, filings with the Securities and Exchange Commission (SEC) indicate that Berkshire’s leadership has sold about 26% (approximately 266.5 million shares) of their Bank of America investment.
Image source: Getty Images.
Buffett’s Most Confident Investment Revealed
Interestingly, the stock that Warren Buffett seems most confident in isn’t included in Berkshire’s SEC Form 13Fs, which track the company’s buying and selling actions.
Instead, insights into this preferred investment can be found in Berkshire Hathaway’s quarterly operating results. Before the executive certifications begin, investors can see how many shares of Berkshire Hathaway Class A and B (BRK.B) Buffett has acquired. Fittingly, Buffett’s most confident purchases are in his own company’s stock.
Yet, buying Berkshire’s shares was not always straightforward for Buffett. Before July 2018, repurchases could only occur if the stock were at or below 120% of book value, a threshold that Berkshire’s stock never reached, preventing buybacks.
On July 17, 2018, Berkshire’s board revised these rules, allowing more freedom for Buffett to repurchase shares he believes are undervalued. Now, as long as Berkshire holds at least $30 billion in cash, cash equivalents, and U.S. Treasuries, and Buffett views the stock as cheap, there are no limits on repurchases.
Despite not purchasing shares in the most recent quarter, Buffett spent a total of $78 billion on buybacks over the previous 24 quarters.
These repurchases not only affirm Buffett’s confidence in Berkshire’s ability to weather long-term economic expansion but also serve two other significant purposes.
First, by reducing the outstanding share count, existing investors see their ownership stakes incrementally increase, a strategy that promotes the long-term approach Buffett’s late partner, Charlie Munger, strongly supported.
Secondly, buybacks enhance the fundamental attractiveness of Berkshire’s stock; when a company maintains steady or growing earnings while decreasing its share count, EPS tends to rise over time.
With Berkshire Hathaway ending the third quarter holding a record $325.2 billion in cash and equivalents, it seems reasonable to expect Buffett to continue purchasing shares of the company he values most in 2025.
Is Now the Right Time to Invest $1,000 in Berkshire Hathaway?
Before investing in Berkshire Hathaway, think carefully:
The Motley Fool Stock Advisor team has identified the 10 best stocks to invest in right now, with Berkshire Hathaway absent from this list. These selected stocks may offer significant returns in the coming years.
For reference, when Nvidia was included on this list on April 15, 2005… a $1,000 investment would now be worth $874,051!*
Stock Advisor equips investors with a clear strategy for success, featuring portfolio guidance, regular updates from analysts, and two new stock recommendations each month. The Stock Advisor service has exceeded S&P 500 returns by over four times since 2002*.
Learn more »
*Stock Advisor returns as of January 21, 2025
Bank of America and American Express are advertising partners of Motley Fool Money. Sean Williams has positions in Bank of America. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
