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Warren Buffett, often cryptic in his investment moves, continues to intrigue with his secret stock picks. The latest 13F regulatory filing by his company, Berkshire Hathaway (NYSE:BRK.A/NYSE:BRK.B), once again maintained the veil over one of his holdings, adding to the air of mystery surrounding this renowned investor. Known as the Oracle of Omaha, Buffett has filed for confidential treatment of a particular stock, a practice he has employed before. In late 2020, he similarly shrouded his positions in oil giant Chevron (NYSE:CVX) and telecommunications firm Verizon (NYSE:VZ). But what is this new enigmatic stock?
Speculation is rife, and Barron’s points to indications that the undisclosed stock could well belong to the financial sector. Berkshire Hathaway’s latest filings revealed a notable $1.2 billion increase in its cost basis in financials, while other stock groups saw a decline. Furthermore, there was no addition to its existing financial holdings, implying a fresh investment in a new company. As we await the unveiling of Warren Buffett’s latest secret stock, let’s explore some top guesses.
A Strong Contender: Morgan Stanley (MS)
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Farmers, Finances, and Floats: A Deep Dive into Agri-Finance and Insurance Stocks
Federal Agricultural Mortgage (NYSE:AGM), affectionately known as Farmer Mac, operates as a financial support system for farmers and rural communities across America, bearing the hallmark stamp of federal government backing. A nod to historical antecedents, the president handpicks five out of the 15 board members at Farmer Mac, making it a favorite among esteemed investors like Warren Buffett.
Farmer Mac’s intimate rapport with the government ensures a safety net precariously absent from the commercial and investment banking sectors. With luminous prognosticators signaling a commodities super cycle on the cusp, agriculture prices are poised for an upward trajectory. Standing as a beacon of opportunity amid this financial flux is AGM stock, presently trading at a paltry 11 times the 2024 earnings estimates – a bargain in Buffett’s discerning eyes, given his penchant for stocks purchased at 15 times earnings or less.
Reflecting its robust financial stance, Farmer Mac distributes a substantial quarterly dividend of $1.10 per share, yielding a respectable 2.38%. Despite a marginal 1% dip in AGM stock this year, the company has witnessed a remarkable 35% surge in the last 12 months, growing by an astronomical 130% over the past five years, accentuating its inexorable ascent.
Aflac (AFL)
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Another darling of Buffett’s heartstrings is Aflac (NYSE:AFL), an insurance company enthralling the Sage of Omaha with its robust premiums that can be lucratively reinvested – the much-revelled “float”. Standing as an alluring addition to Berkshire Hathaway’s insurance repertoire, Aflac offers supplemental insurance coverage, seamlessly bolstering its appeal to the investment maestro.
Enticingly, Aflac is currently trading at a mere 10 times the future earnings estimates, showcasing a modicum of valuation, and paying a generous dividend of $0.50 per share each quarter, yielding a bountiful 2.52%. Notably, Aflac derives roughly 70% of its income from Japan, where employment and government insurance coverages are commendably less extravagant. Buffett’s fondness for Japan, underscored by his substantial investments in the country’s trading houses in recent years, augments Aflac’s allure as an investment blue chip.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
