We recently compiled a list of the 9 Stocks Warren Buffett Has Bought Since Beginning of AI Revolution. In this article we are going to take a look at where Chubb Limited (NYSE:CB) stands against Buffet’s other stock picks since the beginning of AI revolution.
Artificial intelligence has been the buzzword on Wall Street for the past several months, with investors tripping over themselves to get a piece of the pie as the new technology sweeps the business world. AI-powered trading systems now account for over 60% of total equity trading volume in the United States. Investors have been turning to AI for enhanced efficiency and faster decision-making speeds. These AI-based investing algorithms can analyze vast datasets and predict stock price movements with up to 80% accuracy. The potential of AI-driven investment funds can be understood better by comparing their performance against traditional peers, with the former outperforming the latter by 1-3% annually.
However, if there is one person who seems least bothered by this hullabaloo, it is Warren Buffett, an American business tycoon, entrepreneur, and investor presently serving as the chief of Berkshire Hathaway, one of the biggest hedge funds in the world. When Buffett speaks, the world listens. At the annual shareholder meeting of his organization in early May, Buffett tackled the subject of artificial intelligence, reinforcing cliches about his mistrust towards technology stocks but stopping short of denouncing it altogether. However, the Oracle of Omaha, as he is affectionately known, did compare the rise of AI to the invention of the nuclear weapons, describing both technologies as genies that could not be returned to the bottle.
Buffett, whose personal net worth is over $136 billion, manages a 13F portfolio at his hedge fund that was worth more than $331 billion at the end of the first quarter of 2024. In contrast to most other money managers on Wall Street, the strength of his portfolio is derived from value offerings that he has held onto for years and even decades, as opposed to the day trading habits of some of his more aggressive peers in the hedge fund universe. This investing acumen has earned Buffett a legendary status in the finance world and is partly the reason why tens of thousands of people lined up the streets of Omaha in May to listen to him speak about AI and whether he would be investing in the new technology.
In response to a question about AI, Buffett noted that even though he did not fully understand the new technology, he was wise enough to gather, from what he had seen already, that it held enormous potential. He clarified, however, that he did not yet know whether this potential would do more good than harm. Perhaps the most interesting statement from the investing guru at the annual shareholder meeting, and one that illustrates the difference between him and other money managers, was about the impact that AI would have on ordinary people and their ordinary workplaces. According to Buffett, AI could create more leisure time for people, but he was more interested in how they would spend that time than in how AI would bring that about.
“It can create an enormous amount of leisure time. Now what the world does with leisure time is another question. I know an awful lot of people think when they go to work at first what they want is leisure time – and what I like is actually having more problems to solve.”
Our Methodology
For this article, we scanned the stock portfolio of Berkshire Hathaway according to the 13F filings submitted at the end of the first quarter of 2024. We compared his Q1 2024 13F portfolio to his Q3 2022 13F portfolio, selecting the companies with the biggest percentage change in number of shares. The companies that feature in the Q1 2024 13F portfolio but did not feature in the Q3 2022 13F portfolio have also been included. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of an insurance agent’s hand pointing to a marine insurance policy, highlighting the company’s expertise in marine coverage.
Chubb Limited (NYSE:CB)
Number of Hedge Fund Holders: 53
Berkshire Hathaway’s Shares in Q1 2024: 25,923,840
Chubb Limited (NYSE:CB) is a Switzerland-based insurance firm. The firm recently posted earnings for the second quarter of 2024, reporting adjusted earnings per share of $5.38, easily beating consensus estimates by $0.23. The revenue over the period was $12.3 billion, up more than 12% compared to the revenue over the same period last year. Operating earnings during the second quarter were up nearly 10%. These results showcase why the shares of the firm have jumped up over 30% in the past twelve months. Despite catastrophe losses, the stock has strong underlying profitability numbers.
Another important indicator of the health of Chubb Limited (NYSE:CB) stock is the climbing premiums. In the second quarter of 2023, the firm reported that property and casualty net premiums rose by over 10% to $11.8 billion. In North America, P&C premiums rose by 7.1% while overseas, the firm grew premiums by 15.6%. The firm also has room to grow net interest income in the next few months as it reinvests securities bought when interest rates were lower than they are at the present.
Overall CB ranks 3rd on our list of the best stocks Warren Buffett has bought since beginning of AI revolution. While we acknowledge the potential of CB as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for AI stock that is more promising than CB but that trades at less than 5 times its earnings, checkout our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.