Adam Levy, The Motley Fool

Sun, Jun 29, 2025, 7:00 AM6 min read

• Warren Buffett has consistently sold more stocks than he bought over the last 30 months.

• The biggest challenge is that many of the biggest companies in the market have high valuations and low expected returns.

• This investment is low-risk and offers good value right now.

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Warren Buffett is widely regarded as one of the greatest investors of all time. He has a public track record of over 70 years to back that up, generating massive market-trouncing returns over that time.

His company, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has continued to outperform the S&P 500 (SNPINDEX: ^GSPC) in 2025. That's despite the fact that Buffett's retirement announcement in May has somewhat deflated the premium investors are willing to pay for shares. That speaks to the strength of Buffett's portfolio of investments, including owned and operated businesses, marketable equities, private issues, and bonds.

While Buffett expects everything his company buys to outperform over the long run (why else would he buy it?), one of Berkshire's biggest holdings looks particularly well-positioned to do so in the near term. That's backed up by analysis from Morgan Stanley's team of market analysts led by Lisa Shalett.

Here's the Buffett investment that could outperform over the rest of the year.

It's worth pointing out that Buffett has had a hard time identifying great opportunities in the stock market recently. Not only that, but he's consistently sold many of Berkshire's biggest marketable equity holdings, including Apple (NASDAQ: AAPL), Bank of America (NYSE: BAC), and Citigroup (NYSE: C).

That said, Buffett hasn't said that he sees significant challenges developing at any of those companies. Apple notably remains Berkshire's largest marketable equity holding, accounting for about 21% of the portfolio. Bank of America remains third in line with more than 10% of the $283 billion portfolio invested in the bank stock. Buffett did cut Citi entirely, though.

The challenge for Buffett in holding those stocks appears to be a matter of valuation. Apple's price-to-earnings ratio when Buffett made Berkshire's initial investment in the stock was between 10 and 11.3. Today, it trades for 31 times trailing earnings, and it consistently traded higher throughout the second half of last year.

When it comes to bank stocks, Buffett has mentioned that the new accounting rules requiring banks to mark assets to market make it difficult to assess the financial reality of their balance sheets. As a result, he's less comfortable holding companies like Citi, and he's slowly selling off harder-to-value financial stocks.