In recent years, the profession of stock market trading has seen significant advancements in technology and techniques, benefiting millions of traders in terms of profit booking and loss management.
However, even with these progressions, the strategies, and investment brilliance of Warren Buffett, popularly known as the Oracle of Omaha, continue to inspire and motivate millions of people worldwide.
Warren Buffett, who was born in Omaha, Nebraska, began his investment career in 1951 as a salesperson. Eventually, he became the chairman and CEO of Berkshire Hathaway Inc, a huge multinational conglomerate involved in investments, in 1970. Berkshire Hathaway is known as one of the largest and most influential companies globally.
Every year, at the annual meeting of Berkshire Hathaway, thousands of shareholders and other people involved with the company gather to hear Warren Buffett’s thoughts and ideas about the economy, Wall Street, and future possibilities.
There is nothing better than getting investment advice straight from the investment guru himself.
While Warren Buffett’s investment techniques are not closely guarded secrets and can be accessed by anyone who listens to his talks and speeches, one crucial aspect that many people tend to overlook or neglect is the strictness and clarity of Berkshire’s portfolio positions.
According to the most recent filing (Form 13F) with the Securities and Exchange Commission, an impressive 93% of Warren Buffett’s investment portfolio, valued at $334 billion, is allocated to four main sectors: technology, finance, consumer staples, and energy.
This indicates that a significant majority of his investments are focused on these particular areas, reflecting his investment preferences and strategies.
In this article, we will examine the significant contributions of four sectors, namely technology, finance, consumer staples, and energy, in shaping Berkshire Hathaway as a prominent player in Wall Street. We will also explore some of Warren Buffett’s favorite stock picks within these sectors, which have played a key role in the company’s success.
1 – Technology: The Largest Sector in Berkshire Hathaway’s Portfolio
The technology sector has long been a favorite choice for Berkshire Hathaway and Warren Buffett due to its ability to generate high earnings through innovation and promising future prospects.
While Berkshire Hathaway holds stakes in six different technology stocks, one company stands out among the rest: Apple. As of May 24, 2023, Apple alone accounted for $157.3 billion of the total $166.7 billion invested in the technology sector.
Another intriguing addition to Buffett’s portfolio is Activision Blizzard, a well-known gaming company based in Santa Monica. While Buffett and his company primarily prioritize long-term investments that can yield significant changes over time, the $3.8 billion position in Activision is reportedly intended for arbitrage purposes.
Investing in banks and stocks in the financial sector can be risky because economic challenges can greatly affect both Wall Street and the financial institutions’ financial performance. However, Warren Buffett manages a large financial portfolio without much difficulty and has a high likelihood of achieving good returns in the future.
Warren Buffett’s financial portfolio includes Bank of America, American Express, and Moody’s. While Bank of America benefits from rising interest rates, American Express attracts high-income consumers.
As interest rates rise and the financial sector faces challenges, Moody’s rating segment performs well. This helped Warren Buffett maintain his successful investment record and increases the possibility of earning more in the future.
3 – Consumer staples: Not so big $39.6 billion investment of Warren Buffett
Consumer staples stocks used to be a significant part of Berkshire Hathaway’s portfolio, but their importance has been decreasing over time. Currently, they make up only 11.8% of the invested assets, which is close to the lowest level, except for the fourth quarter of 2021.
Consumer staples stocks are attractive to Berkshire Hathaway because they offer predictable cash flow. Even during banking or economic crises, people continue to buy essential goods. One prime example is Coca-Cola, which operates globally, has popular brands, and a strong marketing presence.
Coca-Cola consistently delivers for its shareholders. Another significant investment in this sector is Kraft Heinz, known for brands like Jell-O and Kraft. These consumer staples provide stability and profitability for Berkshire Hathaway’s portfolio.
4 – Energy: $33.7 billion – A Significant Presence in Berkshire Hathaway’s Portfolio
Berkshire Hathaway’s investment in energy stocks, although relatively small, conveys a clear message that Buffett and his team anticipate sustained high prices for crude oil and possibly natural gas in the coming years.
The majority of their $33.7 billion investment is concentrated in Chevron and Occidental Petroleum, highlighting their confidence in these companies prospects.
Chevron and Occidental Petroleum are both energy companies, but Chevron has additional assets like pipelines and refineries, while Occidental has chemical operations. Chevron has a strong balance sheet, while Occidental is dealing with significant debt from an acquisition.