Sean Williams, The Motley Fool
9 min read
In This Article:
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Riding Warren Buffett's coattails and mirroring his trading activity has been a profitable venture for decades.
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Buffett and his late right-hand man Charlie Munger have long believed in putting most of Berkshire's capital to work in their top ideas.
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Seven magnificent stocks account for more than $203 billion of Berkshire Hathaway's $283 billion investment portfolio.
There's probably not a money manager on Wall Street who garners as much attention as Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett. The appropriately named "Oracle of Omaha" has overseen a nearly 6,000,000% aggregate return in his company's Class A shares (BRK.A) through the closing bell on June 9. For the sake of comparison, the broad-based S&P 500's total return, including dividends, is a shade over 40,000% over the same 60-year timeline.
Despite Buffett being 94 years old and planning to step down as CEO by the end of the year, investors still eagerly follow his investing activity. Riding Buffett's coattails and mirroring his trading activity has been a profitable venture for decades.
But one of the most defining aspects of Warren Buffett's investment philosophy has been his penchant for portfolio concentration. Both Buffett and late right-hand man Charlie Munger believed in putting an outsized percentage of their company's invested assets to work in their best ideas.
With less than seven months to go before Buffett officially cedes his long-held executive role to Greg Abel, he's wagering 72% ($203.3 billion) of Berkshire Hathaway's $283 billion of invested assets on just seven unstoppable stocks.
Despite Buffett paring down 67% of Berkshire's stake in Apple (NASDAQ: AAPL) since Sept. 30, 2023, it still represents the Oracle of Omaha's largest holding by a substantial amount.
While Apple's calling card has often been its innovation, as well as its ongoing transformation into a higher-margin subscription-driven operating model, Buffett's investment in Apple primarily revolves around his keen understanding of consumer behaviors. Apple has an exceptionally loyal customer base, and most importantly consumers trust the brand.
Additionally, Apple has the world's leading share-repurchase program. Since kicking off its buyback initiative in 2013, Apple has spent more than $750 billion to reduce its outstanding share count by 43.3%. Lowering its share count has undoubtedly had a positive impact on the company's earnings per share.
