Warren Buffett Bets Big on These 9 Stocks for 2017- Eric McWhinnie

Warren Buffett | Drew Angerer/Getty Images

Warren Buffett is no stranger to multibillion-dollar investments. The Oracle of Omaha has been beating the market for decades while accumulating positions in some of the world’s most popular companies. Courtesy of a new filing, we now have a peek at how the legendary investor deployed capital in the final three months before 2017.
Many institutional investment managers recently filed their mandatory 13F with the Securities & Exchange Commission (SEC). The filing is a quarterly report of equity holdings required by managers who oversee more than $100 million in qualifying assets and must be filed within 45 days of the end of each quarter. The 13F provides a glance at what firms did in the previous quarter, but investors should keep in mind that hedging and trading strategies of each fund are still unknown.
Buffett’s Berkshire Hathaway made several big changes in the three months ended December 31, 2016. In fact, this was one of the most exciting 13F releases from Buffett and company in recent history. Buffett also recently disclosed that Berkshire Hathaway purchased a net $12 billion in stock since the presidential election.
The conglomerate sold off its stakes in Deere and Kinder Morgan, two positions that had already been reduced in a prior 13F release. Berkshire Hathaway decreased its stakes in Verizon and Wal-Mart, but opened new positions in Monsanto, Siri XM, and Southwest Airlines.
The largest investments in Berkshire Hathaway’s portfolio include some of the most popular blue chips known to Wall Street. Let’s take a look at Berkshire Hathaway’s top nine holdings according to dollar value at the end of December, not including Buffett’s option to purchase 700 million shares of Bank of America at any time prior to September 2021 for $5 billion. No. 7 is new to our Cheat Sheet list of Buffett’s biggest holdings, but it’s one of the most loved companies in the world.

9. Delta Air Lines

DAL stock price | StockCharts.com

A few years ago, Buffett called airlines a “death trap for investors.” Times have changed. Buffett hasn’t said exactly why he likes airline companies so much now, but the evidence is clear, he’s bullish on the industry. At the end of the fourth quarter, Berkshire Hathaway held about 60 million shares of Delta, worth $3 billion, and significantly greater than the 6.3 million shares held in the prior quarter. Investors should also keep in mind that Berkshire Hathaway opened a new position in Southwest Airlines, and increased its stakes in American Airlines and United Continental during the fourth quarter.

8. U.S. Bancorp

USB stock price | StockCharts.com

The financial industry is no stranger to Buffett. Berkshire Hathaway held 85.1 million shares of U.S. Bancorp at the end of the fourth quarter, worth $4.4 billion. The position is unchanged from the prior quarter, but a recent rally in share price continues to keep U.S. Bancorp as one of Berkshire Hathaway’s largest holdings.
U.S. Bancorp is based in Minneapolis and has nearly half a trillion dollars in assets. It’s the parent company of U.S. Bank National Association, the fifth largest commercial bank in the United States. The Company operates 3,106 banking offices in 25 states and 4,842 ATMs. In October, MONEY named U.S. Bank the Best Big Bank in a tie with TD Bank.

7. Apple

AAPL stock price | StockCharts.com

The beloved Apple is on our Buffett Cheat Sheet list for the first time. Berkshire Hathaway more than tripled its prior stake and now owns 57.4 million shares of the tech giant, worth $6.6 billion, as of the end of 2016.
Despite concerns about growth, Apple doesn’t appear to be slowing down. The company sold 78 million iPhones in the holiday quarter, setting a new record. Apple also set new revenue records for the iPhone, Services, Mac, and Apple Watch. Furthermore, Apple’s cash hoard of $246 billion will likely continue to reward investors with dividends and share buybacks for years to come. Apple returned $15 billion to investors in the fourth quarter alone.

6. Phillips 66

PSX stock price | StockCharts.com

The multinational American energy company was originally thought to be sold off by Buffett in the second quarter of 2015. As it turns out, Buffett had the stake classified as confidential so it wouldn’t show on the 13F and allow copycat investors to run the price up. At the end of December, Berkshire Hathaway held 80.7 million shares (worth $7 billion), unchanged the previous quarter, according to the 13F. Phillips 66 is Berkshire Hathaway’s No. 6 largest holding, and appears to be a favorite, especially when its share price dips toward $75.
Unlike oil giants Exxon Mobil and Chevron, Phillips 66 has escaped most of the carnage seen in the energy sector. Buffett told CNBC in 2015: “We’re buying it because we like the company and we like the management very much.”

5. American Express

AXP stock price | StockCharts.com

Warren Buffett has liked American Express since at least the 1960s. Today, the credit card giant is Berkshire Hathaway’s No. 5 largest holding. At the end of the fourth quarter, Berkshire Hathaway held 151.6 million shares (worth $11.2 billion), unchanged from the prior quarter.

Money & Career

20 Brands That Are Sure to Grow During Trump's Presidency

These companies are poised to benefit the most from the Trump administration, thanks in large part to deregulation and increased spending on infrastructure.

American Express shares have struggled in recent years. Costco severed ties from American Express after 16 years in business with each other. American Express was able to make a deal with Sam’s Club, but it did little to comfort Mr. Market at the time. However, shares found a bottom in early 2016 after touching $50, and are in the green this year. Berkshire Hathaway’s positions in Mastercard and Visa come nowhere close to the size of its American Express position.

4. International Business Machines

IBM stock price | StockCharts.com

If you’re looking for a reason not to follow in Buffett’s footsteps, IBM used to be it. The company was the worst performer in the Dow Jones Industrial Average in 2014, and one of the worst performers in 2015. In fact, IBM’s revenue has fallen for 19 consecutive quarters. Nonetheless, Buffett isn’t giving up and you might not want to either. IBM’s stock price has surged from $115 to $180 over the past year, providing yet another example why thinking about the long-term may help you avoid making bad investing decisions.
IBM is Berkshire Hathaway’s No. 4 largest holding. At the end of the fourth quarter, the company held 81.2 million shares (worth $13.5 billion). IBM shares still offer a dividend north of 3%.

3. Coca-Cola

KO stock price | StockCharts.com

Coca-Cola is the most predictable position at Berkshire Hathaway. Buffett is on record saying he will never sell his shares in the world-renowned beverage company, and can often be seen holding a Cherry Coke. At the end of the fourth quarter, Berkshire Hathaway held the usual 400 million shares of Coca-Cola (worth $16.6 billion), making it the company’s No. 3 largest holding.
While sugar water has seen its fair share of problems in recent years, Coca-Cola shares have been experiencing support near $40 since late 2015. Coca-Cola has investments in Monster Beverage, Keurig Green Mountain, and Suja Juice. The company is also making operating changes to drive stronger growth and save $3 billion annually by 2019.

2. Wells Fargo

WFC stock price | StockCharts.com

America’s second most profitable bank is also Buffett’s No. 2 largest holding. Berkshire Hathaway held 479.7 million shares (worth $26.4 billion) of Wells Fargo at the end of the fourth quarter. Somewhat surprisingly, this was once again unchanged from the prior quarter.
Wells Fargo quickly become Buffett’s most controversial holding in September. The mega bank finally admitted it created roughly 2 million fake accounts, which inflated sales numbers and banking fees. Wells Fargo had an incentive program in place that essentially forced employees to commit fraud or risk being fired for underperforming unrealistic sales goals. More than 5,000 workers related to the scandal were fired. Wells Fargo CEO John Stumpf also resigned in the wake of the financial abuse. Buffett appears to be standing by Wells Fargo for now.

1. Kraft Heinz

KHC stock price | StockCharts.com

Berkshire Hathaway’s position in the merged Kraft Heinz has been listed on the 13F for the past six quarters. Buffett teamed up with investment firm 3G Capital to takeover Kraft Foods with Heinz. The deal created one of the biggest food companies in history, with over 10 different brands valued at more than $500 million each. More recently, the company has laid off thousands of workers to cut costs and “consolidate manufacturing across the Kraft Heinz North American network.” In August, Kraft Heinz raised its quarterly dividend 4.3% to $0.60 per share.
Buffett and company held 325.6 million shares of Kraft Heinz at the end of December, worth a whopping $28.4 billion. That makes it Buffett’s largest portfolio holding.
Disclosure: Author holds BRKB and AAPL

Culled from Money & Career Cheat Sheet: