In this article, we discuss the 10 long-term stocks to buy according to Warren Buffett.
There has been a lot written about the legendary investing prowess of Warren Buffett, the chief of Berkshire Hathaway, an Omaha-based hedge fund with a portfolio value of more than $293 billion at the end of the third quarter of 2021. Securities filings show that the top holdings of the fund are concentrated in the technology, financial, and consumer goods sectors with the top ten stakes together comprising a whopping 88% of the entire portfolio. Buffett is one of the wealthiest men on the planet with a personal net worth of over $100 billion.
Historical data from the 13F filings of Berkshire Hathaway, compiled and maintained by Insider Monkey, shows the incredible strides the fund has made in the last decade or so. It also identifies one key factor underpinning the investment philosophy of Buffett — buy smart and hold for the long term. The data reveals how Buffett profited from the financial crisis of 2010, buying stocks at cheap prices, and is now reaping the rewards of riding the highs and lows of the past decade without flinching.
It also outlines a shift towards technology in the past few years as tech disruptors take the market by storm. Investors eager to know more about the historical portfolio in detail should check out some of the long-term stock picks of Buffett and the returns he had made on them. Some of the top stocks in the portfolio of Berkshire Hathaway at the end of the third quarter of 2021 included Visa Inc. (NYSE:V), Apple Inc. (NASDAQ:AAPL), and General Motors Company (NYSE:GM), among others discussed in detail below.
Our Methodology
These were picked keeping in mind the third quarter investment portfolio of Berkshire Hathaway. Data from the historical portfolio was used to identify stocks that have been among the long-term holdings of the fund.
Companies that have featured on the portfolio for at least three years or more were preferred for the list.
Hedge fund sentiment was included as a classifier as well. The hedge fund sentiment around each stock was calculated using the data of 867 hedge funds tracked by Insider Monkey.
Long-Term Stocks to Buy According to Warren Buffett
10. DaVita Inc. (NYSE:DVA)
Number of Hedge Fund Holders: 39
DaVita Inc. (NYSE:DVA) is a healthcare company that provides kidney dialysis services.
Berkshire Hathaway has held a stake in DaVita Inc. (NYSE:DVA) since 2011. It has grown from around $203 million in 2011 to $4.2 billion at the end of September 2021. In the last four quarters, the fund has neither sold nor bought any shares in the company.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Gates Capital Management is a leading shareholder in DaVita Inc. (NYSE: DVA) with 1.4 million shares worth more than $174 million.
Just like Visa Inc. (NYSE:V), Apple Inc. (NASDAQ:AAPL), and General Motors Company (NYSE:GM), DaVita Inc. (NYSE:DVA) is one of the stocks attracting the attention of elite investors.
9. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 33
The Kraft Heinz Company (NASDAQ:KHC) makes and sells food and beverage products.
The Kraft Heinz Company (NASDAQ:KHC) is another long-term holding of Buffett. Historical data reveals that it has featured on the Berkshire portfolio since the third quarter of 2015. In stark contrast to other top holdings, the value of this stake has dropped from $22.9 billion in 2015 to $11.9 billion at the end of the third quarter of 2021. Remarkably, the fund still holds onto the original amount of shares it bought in the firm in 2015.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm First Eagle Investment Management is a leading shareholder in The Kraft Heinz Company (NASDAQ:KHC) with 6.5 million shares worth more than $241 million.
In its Q4 2020 investor letter, Berkshire Hathaway highlighted a few stocks and The Kraft Heinz Company (NASDAQ:KHC) was one of them. Here is what the firm said:
“We exclude our Kraft Heinz holding — 325,442,152 shares — (In the list of 15 common stock investments that at yearend were our largest in market value) because Berkshire is part of a control group and therefore must account for that investment using the “equity” method. On its balance sheet, Berkshire carries the Kraft Heinz holding at a GAAP figure of $13.3 billion, an amount that represents Berkshire’s share of the audited net worth of Kraft Heinz on December 31, 2020.
Berkshire and its subsidiaries hold investments in certain businesses that are accounted for pursuant to the equity method. Currently, the most significant of these is our investment in the common stock of The Kraft Heinz Company (“Kraft Heinz”). Kraft Heinz is one of the world’s largest manufacturers and marketers of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee and other grocery products. Berkshire currently owns 325,442,152 shares of Kraft Heinz common stock representing 26.6% of the outstanding shares.
We recorded equity method earnings from our investment in Kraft Heinz of $95 million in 2020, $493 million in 2019 and losses of approximately $2.7 billion in 2018. Equity method earnings (losses) included the effects of goodwill and identifiable intangible asset impairment charges recorded by Kraft Heinz. Our share of such charges was approximately $850 million in 2020, $450 million in 2019 and $3.7 billion in 2018. We received dividends from Kraft Heinz of $521 million in each of 2020 and 2019 and $814 million in 2018, which we recorded as reductions in our carrying value.
Shares of Kraft Heinz common stock are publicly-traded and the fair value of our investment was approximately $11.3 billion at December 31, 2020 and $10.5 billion at December 31, 2019. The carrying value of our investment was approximately $13.3 billion at December 31, 2020 and $13.8 billion at December 31, 2019. As of December 31, 2020, the carrying value of our investment exceeded the fair value based on the quoted market price by $2.0 billion (15% of carrying value). In light of this fact, we evaluated our investment in Kraft Heinz for impairment. We utilize no bright-line tests in such evaluations. Based on the available facts and information regarding the operating results of Kraft Heinz, our ability and intent to hold the investment until recovery, the relative amount of the decline and the length of time that fair value was less than carrying value, we concluded that recognition of an impairment loss in earnings was not required. However, we will continue to monitor this investment and it is possible that an impairment loss will be recorded in earnings in a future period based on changes in facts and circumstances or intentions.”
8. U.S. Bancorp (NYSE:USB)
Number of Hedge Fund Holders: 42
U.S. Bancorp (NYSE:USB) is a financial services holding company.
Securities filings show that Berkshire Hathaway has held a stake in U.S. Bancorp (NYSE:USB) since the fourth quarter of 2010. The value of this holding has grown from $1.8 billion in 2010 to around $7.5 billion at the end of September 2021. In the last four quarters, the fund has made minor reductions in the stake.
At the end of the third quarter of 2021, 42 hedge funds in the database of Insider Monkey held stakes worth $8.39 billion in U.S. Bancorp (NYSE:USB), up from 41 the preceding quarter worth $8.30 billion.
In addition to U.S. Bancorp (NYSE:USB), hedge funds are paying attention to growth and tech stocks like Visa Inc. (NYSE:V), Apple Inc. (NASDAQ:AAPL), and General Motors Company (NYSE:GM).
In its Q4 2020 investor letter, Mairs & Power, an asset management firm, highlighted a few stocks and U.S. Bancorp (NYSE:USB) was one of them. Here is what the fund said:
“On the negative side, one of the Fund’s biggest detractor in 2020 was U.S. Bancorp (USB). Like all banks, U.S. Bank was hurt by the difficult interest rate environment and credit cycle concerns. We believe banks are strong enough to survive the current sector doldrums, and they remain some of the market’s most attractive opportunities.”
7. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 57
American Express Company (NYSE:AXP) provides payments services.
American Express Company (NYSE:AXP) is perhaps one of the most popular long-term holdings of billionaire Warren Buffett. With minor interruptions, his fund has held a sizable stake in the payments company since the end of 2010. The value of this holding has increased from $6.5 billion in 2010 to $25 billion at the end of the third quarter of 2021. The fund has filed no activity around the stock since 2013.
Among the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading shareholder in American Express Company (NYSE:AXP) with 15.6 million shares worth more than $2.6 billion.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and American Express Company (NYSE:AXP) was one of them. Here is what the fund said:
“In financials, American Express has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”
6. Moody’s Corporation (NYSE:MCO)
Number of Hedge Fund Holders: 58
Moody’s Corporation (NYSE:MCO) operates as a risk assessment firm.
Moody’s Corporation (NYSE:MCO) has been in the Berkshire portfolio since late 2010. The value of the holding, according to regulatory filings, has increased from $754 million in 2010 to $8.7 billion at the end of September 2021. Apart from small reductions to the stake in two quarters in 2013, the fund has neither increased or decreased stake in the firm since 2010.
At the end of the third quarter of 2021, 58 hedge funds in the database of Insider Monkey held stakes worth $15 billion in Moody’s Corporation (NYSE:MCO), up from 44 in the previous quarter worth $16 billion.
Alongside Visa Inc. (NYSE:V), Apple Inc. (NASDAQ:AAPL), and General Motors Company (NYSE:GM), Moody’s Corporation (NYSE:MCO) is one of the stocks that hedge funds are buying.
In its Q4 2020 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Moody’s Corporation (NYSE:MCO) was one of them. Here is what the fund said:
“Moody’s Corporation provides credit ratings, financial intelligence, and analytical tools to assist businesses in making decisions. Moody’s reported excellent financial results due to continued growth in rated debt issuance. However, the stock detracted on investor expectations that issuance trends will moderate into 2021.The announced retirement of long-time CEO Ray McDaniel may have also weighed on sentiment. We continue to own the stock due to our views of the company’s long runway for growth and strong competitive advantages.”
5. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 61
The Coca-Cola Company (NYSE:KO) is one of the largest holdings of Berkshire Hathaway. A cursory look at the historical portfolio of the fund reveals that Berkshire Hathaway has held a stake in the firm since 2010. The value of this stake has increased from $13 billion in 2010 to $22 billion at the end of September 2021. The fund registered new activity around the stock most recently in the second and third quarter of 2012.
Among the hedge funds being tracked by Insider Monkey, Boston-based firm Arrowstreet Capital is a leading shareholder in The Coca-Cola Company (NYSE:KO) with 9.3 million shares worth more than $488 million.
4. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 72
Bank of America Corporation (NYSE:BAC) provides banking and financial products.
Securities filings show that Berkshire Hathaway has held a stake in Bank of America Corporation (NYSE:BAC) since 2017. The value of this holding has increased $17 billion in 2017 to $42 billion at the end of the third quarter of 2021. The fund last registered new activity around the stock in the third quarter of 2020.
At the end of the third quarter of 2021, 72 hedge funds in the database of Insider Monkey held stakes worth $46.4 billion in Bank of America Corporation (NYSE:BAC), down from 87 in the previous quarter worth $46.5 billion.
3. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 77
Data compiled by Insider Monkey shows that General Motors Company (NYSE:GM) has featured on the Berkshire portfolio since early 2012. The fund most recently reduced holdings in the company by over 10% in the second quarter of 2021. The value of the overall stake has increased from $256 million in 2012 to around $3 billion at the end of September 2021.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in General Motors Company (NYSE:GM) with 34 million shares worth more than $1.8 billion.
Junto Investments, in its Q4 2020 investor letter, mentioned General Motors Company (NYSE:GM). Here is what the fund has to say about General Motors Company in its letter:
“General Motors was the biggest gainer. We managed to buy it at a screamingly cheap price in the middle of March. A lot of interesting news has emerged about GM recently, including the new electric product delivery system BrightDrop and GM Cruise’s team-up with Microsoft Azure to commercialize self-driving cars in 2021. GM’s intrinsic value is crystallizing and the company is worth a whole lot more than is still reflected in the market.”
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 120
Buffett has been a longtime admirer of Apple Inc. (NASDAQ:AAPL) and finally bought a stake in the company through his fund in early 2016. Today, it is the largest holding of Berkshire Hathaway. Buffett has increased stake in the company by over 100% since he first bought it. The value of the stake has increased from $1 billion in 2016 to $125 billion at the end of the third quarter of 2021.
At the end of the third quarter of 2021, 120 hedge funds in the database of Insider Monkey held stakes worth $145 billion in Apple Inc. (NASDAQ:AAPL), down from 138 in the preceding quarter worth $146 billion.
In its Q1 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”
1. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 143
Visa Inc. (NYSE:V) is another long-term holding of the legendary investor. According to 13F filings, Berkshire has held a stake in the company since 2011. The value of this holding has increased from $196 million in 2011 to $2 billion at the end of September 2021. The fund reduced stake in the firm by over 4% in the third quarter compared to the filings for the second.
At the end of the third quarter of 2021, 143 hedge funds in the database of Insider Monkey held stakes worth $26 billion in Visa Inc. (NYSE:V), down from 162 in the preceding quarter worth $27 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Visa Inc. (NYSE:V) was one of them. Here is what the fund said:
“To make room for these new names with more attractive outlooks related to the reopening, we sold out of companies where the thesis is not playing out at the pace we expected including Visa.”
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Disclosure. None. 10 Long-Term Stocks to Buy According to Warren Buffett is originally published on Insider Monkey.
