Warren Buffett
Photograph by Michael Prince/The Forbes Collection
Take the best of Warren Buffett’s portfolio and you’re likely to beat the market, again and again. Two of his big winners in 2022 include Chevron
CVX
(CVX
CVX
) and Occidental Petroleum
OXY
(OXY), up about 52% and 116%, respectively in 2022. That’s incredible performance in a year the S&P 500 is down 18%.
Buffett is one of the world’s richest and most successful investors. As CEO and chairman of conglomerate Berkshire Hathaway (BRK.A), he has amassed a personal net worth topping $100 billion. He’s also created billions in wealth for Berkshire Hathaway shareholders.
Not surprisingly, the Buffett-led stock portfolio at Berkshire Hathaway gets a lot of attention. Investors, novices and experts alike, treat Buffett’s stock trades as indirect prophecy. Because if Buffett’s buying or selling or stock, there must be a good reason.
So here’s the download on his most recently reported stock moves—plus 12 Warren Buffett stocks that could help you reach your investment goals in 2023.
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Buffett’s Quarterly Portfolio Disclosures
The Securities and Exchange Commission (SEC) requires Berkshire Hathaway to disclose its stock holdings quarterly via Form 13F. That gives investors everywhere a line of sight into Buffett’s portfolio.
Unfortunately, there is a lag in the data. Berkshire’s most recent 13F, filed on November 14, 2022, outlines the company’s holdings as of September 30, 2022. The information below on Buffett’s top holdings and trades comes from that filing.
The next quarterly filing is due in mid-February. You can access it through the SEC’s database EDGAR.
Buffett’s Top Stock Holdings By Size
Berkshire Hathaway’s stock portfolio at the end of the third quarter had a market value of roughly $296 billion. That value is spread across roughly 50 stocks. The table below shows the top 10 holdings in the portfolio by market value.
A quick scan of the table above reveals a surprising lack of diversification. For one, Buffett is very heavy in Apple
AAPL
. He’s also apparently optimistic about tech, oil and gas, finance and consumer staples.
Buffett On Diversification
Buffett is famously against the practice of diversification. In his words, “diversification is protection against ignorance.” He’s not wrong there. Diversification limits the downside effect of bad decisions. But it’s the other side of that equation where Buffett has an issue. Diversification also limits the upside of good investing decisions.
Still, this is an aspect of Buffett’s investing strategy you don’t want to imitate. Buffett has many times more resources and experience than the average investor. So he’s less likely to be wrong, but better equipped to manage the consequences.
It’s also worth noting that Berkshire Hathaway’s business holdings go well beyond this stock portfolio. The conglomerate owns more than 70 companies outright, including Duracell, Geico Insurance and See’s Candies. So while the stock portfolio seems concentrated, Berkshire Hathaway’s broader business holdings are more diversified.
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Stocks Buffett Recently Sold
Buffett is known for his long-term investing strategy. He tends to buy companies he can hold forever. When he closes or reduces positions that’s a signal the company’s outlook has changed for the worse in Buffett’s eyes.
In the third quarter of 2022, Berkshire Hathaway closed out one position and reduced its stake in four others. The table below lists all five companies and how many shares Buffett sold in the last reported quarter.
Buffett exited REIT Store Capital in the third quarter. Store announced in September that it would be acquired and taken private by GIC and Oak Street, a division of Blue Owl Capital. Presumably, Buffett didn’t see the value of waiting for that transaction to close. This frees up cash to act on other good deals available in this down market.
Interestingly, Buffett trimmed his U.S. Bank and Bank of New York Mellon
BK
holdings, even as he remains heavily invested in Bank of America
BAC
and American Express
AXP
. Buffett also closed out his Wells Fargo
WFC
position, first bought in 2001, earlier this year.
Stocks Buffett Recently Bought
Berkshire opened three new positions in the third quarter and increased its holdings in five stocks it already owned. The table below summarizes these transactions.
In the third quarter, Buffett picked up a large position in Taiwan Semiconductor plus smaller stakes in building materials company Louisiana-Pacific
LPX
and investment bank Jefferies Financial. All three stocks are down for the year.
Buffett, a value investor, likes stocks he can buy for less than their intrinsic value. This is one reason why Buffett often steps up his buying activity when the market is struggling. Weak financial markets push stock prices down temporarily. That can usher in bargain prices on good companies with solid fundamentals.
So, while Buffett rarely explains why he bought a certain stock, we can surmise a couple things. At third quarter prices, Buffett and his team saw long-term value in Taiwan Semiconductor, Louisiana-Pacific and Jefferies Financial. Buffett is also looking past inflation and interest-rate hikes that could create short-term headwinds for the housing and financial industries.
Buffett’s Top Stock Picks
Every stock in Buffett’s portfolio has long-term potential. But some might be better fits for your investment goals than others. The table below shows 12 Buffett stock picks that analysts like for 2023, including four solid dividend stocks: Apple, Bank of America, Taiwan Semiconductor and Visa
V
.
To make these stocks work for you, it helps to adopt a few of Buffett’s investing strategies. The big ones are: Keep your focus on the long term, invest in what you know, act on bargains and trade against the grain.
Long-term Focus
Buffett does not invest for quick gains. The surest path to wealth creation in his mind involves compound growth over decades. Knowing that, you should never assume a Buffett stock is going to pop quickly. Have patience and look past the temporary downturns.
Invest In What You Know
If you don’t understand a company’s business model, don’t invest in it. Buffett himself has historically been light on tech stocks for this reason. As a shareholder, you should grasp how the company makes its money, what its lasting competitive advantages are, and the potential threats to those competitive advantages.
Without that insight, it’s harder to identify changes in the company’s long-term prospects. As a result, you may miss opportunities to increase your position. Or worse, you may hold onto a stock longer than you should.
Act On Bargains
Buffett likes a good deal. In his view, a temporarily low stock price gives you a head start on long-term appreciation. This doesn’t mean you should buy cheap stocks, however. Look for value instead. You can find value in good companies at efficient prices.
Trade Against The Grain
Buffett likes to buy when other investors are selling and sell when other investors are buying. Trading against the grain is one of the best ways to ramp up your long-term investing profits.
Many investors don’t follow this practice because it’s scary. It can feel wrong to buy stocks when the market is in a tailspin. Likewise, selling in a rising market takes you out of the game at the most exciting time. But set those emotions aside and you can see that the math works. Going against the grain naturally supports buying low and selling high–and that’s how you make a profit.
Remember these Buffett strategies as you research the stocks that’ll support your investment goals in the year ahead. 2023 will have its share of surprises. You can be ready with a portfolio of solid companies you understand, a long-term timeline, and a willingness to chart your own course.