Of course, most individual investors and larger investors dream of becoming billionaires one day, but the harsh truth is that only a few will manage to reach and exceed the $1 billion mark. However, investors could at least invest like a billionaire in an attempt to generate attractive trading profits. One way to invest alongside billionaire Warren Buffett for instance is to piggyback his long term public trades, which are revealed by his quarterly 13Fs. Buffett’s Berkshire Hathaway recently submitted its 13F filing for the fourth quarter, which discloses several noteworthy and interesting moves. It is widely-known that the Oracle of Omaha is a long term-focused investor, so his public equity portfolio could be easily replicated by individual investors sharing the same investment philosophy and style. But is it profitable to track and piggyback Buffett’s moves? Berkshire Hathaway’s long positions in companies with a market capitalization of at least $1 billion generated a weighted average negative return of 4.4% in 2015, but value investing usually involves focusing on the long run. With that being said, the following article will discuss the largest equity positions of Buffett as of the end of the fourth quarter of 2015, as well as several noteworthy moves made during the last three months of 2015.
At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details here).
Let’s begin our journey by looking at Warren Buffett’s largest equity holding as of the end of 2015, represented by Wells Fargo & Co (NYSE:WFC). Berkshire Hathaway upped its stake in the community-based financial services company by 9.41 million shares during the December quarter, ending the year with a whopping 479.70 million shares. The enlarged stake was valued at approximately $26.08 billion at the end of December and accounted for 19.78% of Berkshire’s equity portfolio. The shares of Wells Fargo & Co (NYSE:WFC) are down by at least 11% since the beginning of 2016, which has pushed the company’s valuation to more attractive levels. The stock trades at a forward P/E multiple of 10.45, which is below the average of 12.0 for the financial sector. Wells Fargo reported diluted earnings per share of $4.15 for 2015, up from $4.10 reported for 2014. Its full-year 2015 revenues grew 2% year-on-year to $86.1 billion. It is also important to note that Wells Fargo pays a dividend of $1.50 per share, which gives its stock a yield of 3.17%. Ken Fisher’s Fisher Asset Management reported owning 18.99 million shares of Wells Fargo & Co (NYSE:WFC) in the latest round of 13Fs.