In this article, we will be taking a look at 10 blue chip stocks in Warren Buffett’s portfolio.
Any introduction we were to give for Warren Buffett would never be able to do justice to his life and achievements. Buffett, an American investor and philanthropist, is the man every investor has looked up to for decades and to this date. He is the CEO of Berkshire Hathaway, one of the most successful hedge funds operating today. As of March 2022, his net worth stands at over $117 billion, a figure that has made him the sixth wealthiest person in the world.
Buffett’s Berkshire Hathaway, according to the fourth quarter’s filings, has a portfolio value of over $330 billion. He is known to invest primarily in the technology and financial sectors, alongside a whole swathe of other areas such as services, healthcare, and basic materials. The fund’s portfolio benefits from a large degree of investments being poured into reputable blue chip stocks as well, like Apple Inc. (NASDAQ:AAPL), Bank of America Corporation (NYSE:BAC), and The Coca-Cola Company (NYSE:KO). These three stocks hold some of the largest positions in Buffett’s investment portfolio, making up 47.6%, 13.6%, and 7.2% of the portfolio, respectively.
What are Blue Chip Stocks?
Blue chip stocks are typically companies with excellent reputations, by virtue of being large, well-established, and financially sound based on past performance over many years. These companies are known to have dependable earnings and because of their constant income stream, they often pay dividends to their stakeholders. The market capitalizations for these stocks are in the billions, making blue chip stocks the leaders in their respective sectors.
Several studies have shown time and again that blue chip stocks are the safest bets during times of economic volatility. In 2022 growth stocks are facing a lot of turbulence so far amid the Russian invasion of Ukraine and rising interest rates. In this context, it’s wise to pay attention to the blue chip stocks owned by reputable investors like Warren Buffett.
Recently, the most popular US-listed stocks among retail investors by net purchases included blue chip stocks like Apple Inc. (NASDAQ:AAPL) and Advanced Micro Devices, Inc. (NASDAQ:AMD) among the top five. The continuation of this trend would mean that non-S&P 500 stocks were finally losing their position back to S&P 500 blue chip stocks with a reputation backed by their individual financial performances and their ability to add value to investors’ portfolios.
Our Methodology:
We have selected blue chip stocks backed by Warren Buffett over the past years, including in 2022, for our list below. The stocks have been selected from Berkshire Hathaway’s fourth-quarter portfolio.
Blue Chip Stocks in Warren Buffett’s Portfolio
10. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 39
The Kraft Heinz Company (NASDAQ:KHC) is a multinational food company based in the US. The company was formed through the merger of Kraft Foods and Heinz, and is among the top five blue chip stocks in Warren Buffett’s portfolio.
Christopher Growe, an analyst at Stifel, has a Hold rating on shares of The Kraft Heinz Company (NASDAQ:KHC), as of this February.
The same month, The Kraft Heinz Company (NASDAQ:KHC) raised its long-term financial targets, now expecting organic sales growth of 2% to 3% and EBITDA growth of 4% to 6%. This new outlook, according to Growe, solidifies investor expectations regarding the company’s growth.
In the fourth quarter of 2021, 39 hedge funds were long The Kraft Heinz Company (NASDAQ:KHC), with a total stake value of $12.2 billion. In comparison, 33 hedge funds were long the stock in the previous quarter, with a total stake value of $12.3 billion.
The Kraft Heinz Company (NASDAQ:KHC), like Apple Inc. (NASDAQ:AAPL), Bank of America Corporation (NYSE:BAC), and The Coca-Cola Company (NYSE:KO), is a well-known blue chip stock popular among investors today.
9. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 46
U.S. Bancorp (NYSE:USB) is a bank holding company based in America. It is the parent company of the U.S. Bank National Association, and also the fifth largest banking institution in the country. It makes up about 2.1% of Buffett’s investment portfolio, being one of the most notable blue chip stocks in Warren Buffett’s investment portfolio.
As of this February, Vivek Juneja, an analyst at JPMorgan, holds an Overweight rating on shares of U.S. Bancorp (NYSE:USB).
The same month, U.S. Bancorp (NYSE:USB) also announced its partnership with Microsoft Corporation’s Azure, making it the company’s primary cloud provider for all its applications. The company has dedicated a substantial investment in this move to modernize its technology, which will also enable it to expand its partnerships and increase its profitability.
There were 46 hedge funds holding stakes in U.S. Bancorp (NYSE:USB) in the fourth quarter of 2021, and their total stake value was $7.9 billion. Berkshire Hathaway was the largest stakeholder in the company, holding 126,417,887 shares worth over $7.1 billion.
8. The Bank of New York Mellon Corporation (NYSE:BK)
Number of Hedge Fund Holders: 49
The Bank of New York Mellon Corporation (NYSE:BK) is another big name among the banking blue chip stocks in Warren Buffett’s portfolio. It is a US-based investment banking services holding company headquartered in New York.
Wells Fargo’s Mike Mayo holds an Equal Weight rating on shares of The Bank of New York Mellon Corporation (NYSE:BK) as of this March.
In the fourth quarter of 2021, The Bank of New York Mellon Corporation (NYSE:BK) had an EPS of $1.04, beating estimates by $0.03. Its revenue was $4.02 billion, also beating estimates by $41.4 million. The Bank of New York Mellon Corporation (NYSE:BK) has also gained 0.4% in the past six months.
Out of 924 hedge funds, 49 hedge funds were long The Bank of New York Mellon Corporation (NYSE:BK) in the fourth quarter. Their total stake value was $5.2 billion. Of these funds, Buffett’s Berkshire Hathaway was the largest stakeholder in this company as well, holding 72,357,453 shares worth over $4.2 billion.
Like Apple Inc. (NASDAQ:AAPL), Bank of America Corporation (NYSE:BAC), and The Coca-Cola Company (NYSE:KO), The Bank of New York Mellon Corporation (NYSE:BK) is a lucrative investment option for hedge funds today.
7. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 53
Chevron Corporation (NYSE:CVX) is an energy corporation based in the US and operating internationally. The company is among the successor companies of Standard Oil, and has operations in over 180 companies. It is also a dividend payer, and has been offering sustainable dividend income to its investors for the past six years. Chevron Corporation (NYSE:CVX) is thus among the best blue chip stocks in Warren Buffett’s portfolio.
Morgan Stanley’s Devin McDermott holds an Equal Weight rating on Chevron Corporation (NYSE:CVX) shares as of this March.
Lawrence C. Strauss from Barron’s reported that Chevron Corporation (NYSE:CVX) is among the 12 equity income names that must be chosen for retirement investment. The stock, like all dividend stocks, has the potential to be considered an integral part of any well-balanced retirement portfolio.
Chevron Corporation (NYSE:CVX) had 53 hedge funds holding stakes in it in the fourth quarter of 2021, compared to 51 hedge funds in the previous quarter. Their total stake values were $6.5 billion and $4.4 billion, respectively.
6. Moody’s Corporation (NYSE:MCO)
Number of Hedge Fund Holders: 58
Moody’s Corporation (NYSE:MCO) is a financial services company operating in the US. It is the holding company for Moody’s Investors Service and Moody’s Analytics.
Toni Kaplan, an analyst at Morgan Stanley, holds an Equal Weight rating on shares of Moody’s Corporation (NYSE:MCO) as of this March.
The company’s EPS in the fourth quarter of 2021 was $2.3, and its revenue was $1.5 billion. Moody’s Corporation’s (NYSE:MCO) revenue beat estimates by $33.9 million.
Berkshire Hathaway was again the largest stakeholder in Moody’s Corporation (NYSE:MCO), holding 24,669,778 shares worth over $9.6 billion. There were 58 hedge funds in total holding stakes in Moody’s Corporation (NYSE:MCO) in the fourth quarter of 2021, with a total stake value of $16.9 billion.
Just like Apple Inc. (NASDAQ:AAPL), Bank of America Corporation (NYSE:BAC), and The Coca-Cola Company (NYSE:KO), Moody’s Corporation (NYSE:MCO) is a popular stock pick among investors today.
5. Verizon Communications (NYSE:VZ)
Number of Hedge Fund Holders: 63
Verizon Communications (NYSE:VZ) is a communication services company offering communications, technology, information, and entertainment products and services through its subsidiaries. The company is also a strong dividend payer, having raised its dividend yield for 17 years in a row.
In January, Deutsche Bank analyst Bryan Kraft reiterated a Hold rating on Verizon Communications (NYSE:VZ) shares.
Verizon Communications’ (NYSE:VZ) earnings history shows an EPS of $1.31 in the fourth quarter of 2021, and revenue of $34.1 billion. Both beat consensus estimates, by $0.03 and $30.6 million, respectively.
In the fourth quarter, 63 hedge funds were long Verizon Communications (NYSE:VZ), with a total stake value of $10.9 billion.
4. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 64
American Express Company (NYSE:AXP), a credit card service company, is among the blue chip stocks in Warren Buffett’s portfolio, making up 7.5% of the portfolio. The company operates internationally as well as in the US, and specializes in payment card services.
Mihir Bhatia, an analyst at BofA, holds a Buy rating on American Express Company (NYSE:AXP) shares as of this March.
In the same month, the company announced an increase of 20% in its quarterly dividend, bringing it up to $0.52 per share. This significant increase is set to offer income investors an attractive dividend, raising the company’s popularity.
American Express Company (NYSE:AXP) had 64 hedge funds holding stakes in it in the fourth quarter, and 57 hedge funds holding stakes in it in the previous quarter. Their total stake values were $28.9 billion and $29.6 billion respectively.
3. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 70
The Coca-Cola Company (NYSE:KO) is among the blue chip stocks in Warren Buffett’s portfolio that helped the billionaire investor make $4.6 billion in only dividends just last year. The company operates in the consumer staples sector, producing non-alcoholic beverages for consumption. Some of its brands include Fresca, Sprite, and Fanta.
Evercore ISI’s Robert Ottenstein holds an Outperform rating on shares of The Coca-Cola Company (NYSE:KO) as of this February.
The company’s EPS in the fourth quarter of 2021 was $0.5, beating estimates by $0.04. The Coca-Cola Company (NYSE:KO) also had revenue of $9.5 billion in this quarter, beating estimates by $579.3 million. The stock has gained 12.1% in the past six months and 1.9% year to date as well.
Our hedge fund data for the fourth quarter of 2021 shows 70 hedge funds long The Coca-Cola Company (NYSE:KO) in that quarter. Their total stake value was $28.6 billion.
2. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 84
Bank of America Corporation (NYSE:BAC) is a US-based multinational investment banking and financial services holding company. The company is among the top five blue chip stocks in Warren Buffett’s portfolio. It constitutes 13.6% of the portfolio, according to Berkshire Hathaway’s latest 13F holdings.
Bank of America Corporation (NYSE:BAC) was upgraded from Underperform to Neutral this March by David George, an analyst at Baird.
Bank of America Corporation’s (NYSE:BAC) EPS in the fourth quarter of 2021 was $0.8, beating estimates by $0.1. The company’s revenue was $22.1 billion, and the stock has gained 2.3% in the past six months.
There were 84 hedge funds holding stakes in Bank of America Corporation (NYSE:BAC) in the fourth quarter, compared to 72 hedge funds in the previous quarter. Their total stake values were $47.9 billion and $46.5 billion respectively.
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 134
Apple Inc. (NASDAQ:AAPL) is one of the most renowned blue chip stocks in Warren Buffett’s portfolio and specializes in consumer electronics, software, and online services.
Bernstein’s Toni Sacconaghi holds a Market Perform rating on shares of Apple Inc. (NASDAQ:AAPL) as of this March.
In the fiscal first quarter of 2022, Apple Inc. (NASDAQ:AAPL) had an EPS of $2.1, beating estimates by $0.2. The company’s revenue was $123.9 billion, also beating estimates by $5.4 billion. The stock has gained 15.9% in the past six months as well.
Out of 924 hedge funds, 134 hedge funds held stakes in Apple Inc. (NASDAQ:AAPL) in the fourth quarter. Their total stake value was $186 billion.
Saturna Capital, an investment management firm, mentioned Apple Inc. (NASDAQ:AAPL) in its fourth-quarter 2021 investor letter. Here’s what they said:
“Concerning the stock market, we avoid short-term predictions. But what of the next decade? A theme since the start of the pandemic has been the big getting bigger. Apple flirts with a $3 trillion market capitalization, trailed by Microsoft, as Alphabet and Amazon also appear among the top five largest companies.
While Apple may not be a network in the traditional sense, it does have over one billion active users dedicated to its products. Apple’s unrivalled ability to integrate complex technology with a user-friendly customer experience positions the company to extend into media content, augmented reality, the connected home, and perhaps EVs, all while growing its profitable subscription revenue.”
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Disclosure: None. 10 Blue Chip Stocks in Warren Buffett’s Portfolio is originally published on Insider Monkey.
