If one starts stacking up all that has ever been written on the ‘Oracle of Omaha’, it would probably fill up a whole library. Perhaps no words can ever do full justice to the man, who has managed to beat the markets and that too by a wide margin for 50 years. Actually, no one needs words or adjectives to describe Warren Buffett because the performance of his investment company Berkshire Hathaway speaks for itself. In the period between 1965 and 2015, while the S&P 500 generated annualized returns of 9.7%, Berkshire Hathaway Inc. (NYSE:BRK.A)’s stock delivered annualized returns of 20.8%. Since a lot has already been said and written about Mr. Buffett, in this post we are not going to waste the time of our readers in enumerating his brilliance. Rather, we will go through the five stocks that Berkshire has held for a long time and try to understand why they still account for a major chunk of its portfolio.
We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).
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#5 USG Corporation (NYSE:USG)
– Shares Owned by Berkshire Hathaway (as of December 31): 39 million
– Value of Holding (as of December 31): $1.04 billion
Berkshire Hathaway initiated its stake in USG Corporation (NYSE:USG) in the fourth quarter of 2000 by purchasing 6.5 million shares of the company. Over the years, it has kept increasing that stake and now owns over 26% of all outstanding shares of USG Corporation (NYSE:USG). Since the company generates consistent income and Berkshire Hathaway owns a large stake in it, there always have been rumors on the Street that the firm will eventually acquire the company. Another notable investor with a substantial stake in the company is billionaire David E. Shaw‘s D.E. Shaw, which owned 575,850 shares of USG Corporation at the end of December. Though USG Corporation’s stock has fallen considerably since the second half of 2015, it is trading in the green this year with marginal gains of 1.31%. The company is expected to report its fiscal 2016 first quarter results next month and analysts currently project it to report EPS of $0.25 on revenue of $932.79 million. For the same quarter of the previous financial year, it had reported EPS of $0.29 on revenue of $909 million.