In this article, we will take a look at Kanye West stock portfolio vs. Warren Buffett stock portfolio. To skip our introduction and immediately see who wins this competition, click Kanye West Stock Portfolio vs. Warren Buffett Stock Portfolio: Who Wins?
Back in December 2017, American rapper Kanye West gifted her then-wife Kim Kardashian about $200,000 worth of stocks as a Christmas present. It was clearly a peculiar present and it seemed Kim Kardashian was also pleasantly surprised. She shared this gift in an Instagram post with a “best husband alert” title. In the post Kardashian shared the photos of different stock certificates gifted to her by Kanye West and some related details. These stocks included Adidas, Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Netflix, Inc. (NASDAQ:NFLX) and Disney. At the time many lauded Kanye’s stock-picking skills as all of these were blue-chip companies posting solid returns and had a strong outlook. But how did these stocks perform over the years? Was Kanye West’s stock portfolio really able to beat the market like many had predicted at the time? In this post we decided to evaluate the returns of Kanye West’s stock portfolio and compare them to Warren Buffett’s stock portfolio returns. While some might call this an unfair comparison, we believe it’d be an interesting exercise since Kanye West’s business skills aren’t a secret. The 45-year rapper has started many businesses and ventures over these years. He has an estimated worth of about $400 million.
Kanye West’s Business Acumen
Yeezy, which Ye started in collaboration with Adidas, is perhaps the biggest business venture of the rapper which has pocketed him millions of dollars. While the partnership has run into trouble, some latest media reports claimed that Ye made about $25 million just from the sale of leftover Yeezy stock. Some other notable ventures of Ye include creative agency Donda and independent record label Good Music. He has also reportedly bought fast food restaurants in the past through his company KW Foods.
But it comes to Warren Buffett, his investment philosophy and impeccable record of beating the market hardly needs any introduction since we have talked about these topics in detail previously in our articles. For this article we were interested in taking a look at what Buffett was talking about in his letter to shareholders in 2017, the year for which we use his stock portfolio in our article. And we were not surprised to see that Buffett in 2017 was repeating the same, age-old and time-tested investment mantras which have served him so well over all these years.
Take a look at the humility of Buffett when he talks about his “secrets” of success.
“Charlie and I view the marketable common stocks that Berkshire owns as interests in businesses, not as ticker symbols to be bought or sold based on their “chart” patterns, the “target” prices of analysts or the opinions of media pundits. Instead, we simply believe that if the businesses of the investees are successful (as we believe most will be) our investments will be successful as well. Sometimes the payoffs to us will be modest; occasionally the cash register will ring loudly. And sometimes I will make expensive mistakes. Overall – and over time – we should get decent results. In America, equity investors have the wind at their back. From our stock portfolio – call our holdings “minority interests” in a diversified group of publicly-owned businesses – Berkshire received $3.7 billion of dividends in 2017. That’s the number included in our GAAP figures, as well as in the “operating earnings” we reference in our quarterly and annual reports. That dividend figure, however, far understates the “true” earnings emanating from our stock holdings. For decades, we have stated in Principle 6 of our “Owner-Related Business Principles” that we expect undistributed earnings of our investees to deliver us at least equivalent earnings by way of subsequent capital gains. Our recognition of capital gains (and losses) will be lumpy, particularly as we conform with the new GAAP rule requiring us to constantly record unrealized gains or losses in our earnings. I feel confident, however, that the earnings retained by our investees will over time, and with our investees viewed as a group, translate into commensurate capital gains for Berkshire. The connection of value-building to retained earnings that I’ve just described will be impossible to detect in the short term. Stocks surge and swoon, seemingly untethered to any year-to-year buildup in their underlying value. Over time, however, Ben Graham’s oft-quoted maxim proves true: “In the short run, the market is a voting machine; in the long run, however, it becomes a weighing machine.”
Kanye West Photo Credit: David Shankbone
Our Methodology
For this article, we first discussed Kanye West’s five stock picks based on the gifts he gave to Kim Kardashian in 2017. The details of these stocks were reported by several media outlets. We then mentioned the top 5 stock picks of Warren Buffett using his Q4’2017 portfolio. We then compared equal-weighted returns of both these stock portfolios.
Kanye West Stock Portfolio vs. Warren Buffett Stock Portfolio
First, we take a look at Kanye West’s stock portfolio.
adidas AG (OTC:ADDYY)
Number of Hedge Fund Holders: N/A
According to media reports Kanye West gifted around 1015 shares of Adidas to Kim Kardashian for the 2017 Christmas. As of June 4 the stock was trading at around $85.79, while its price back in December 2017 stood at around $98.46. The stock’s return is a negative 12.86% during the period starting from late December until June 4.
Here is what Polen International Growth Fund has to say about adidas AG (NYSE:ADDYY) in its Q1 2022 investor letter:
“We added to the Portfolio’s position in adidas AG as we believe the company’s management team is making strides in positioning the company for faster growth. Innovative product development, along with interesting design and marketing collaboration initiatives, have been unlocking the company’s growth potential.
We also believe the continuing shift away from wholesale distribution to direct-to-consumer sales should drive steady margin progress. We estimate that adidas will grow earnings in the high teens annually over the next five years.”
Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 243
Amazon.com, Inc. (NASDAQ:AMZN)’s stock price on December 25 was around $58.52 while today the stock price stands at $124.25. Amazon.com, Inc. (NASDAQ:AMZN) has returned more than 112% during this period. This way, Amazon.com, Inc. (NASDAQ:AMZN) was one of the best stock picks of Kanye West.
Amazon.com, Inc. (NASDAQ:AMZN) is also highly popular among hedge funds tracked by Insider Monkey. As of the end of the first quarter of 2023, 243 hedge funds had stakes in the company. The biggest hedge fund stakeholder of Amazon during this period was Natixis Global Asset Management’s Harris Associates which owns a $2.4 billion stake in the company.
Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 131
Apple Inc. (NASDAQ:AAPL) is another top performer in Kanye West stock portfolio. Apple Inc. (NASDAQ:AAPL) shares were trading at approximately $42.70 as of December 25, 2017, while today the stock price stands at $180.95. Apple has returned about 320% in this period.
Hedge funds also love Apple Inc. (NASDAQ:AAPL). As of the end of the first quarter of 2023, 131 hedge funds tracked by Insider Monkey had stakes in Apple Inc. (NASDAQ:AAPL). The biggest hedge fund stakeholder of Apple was, you guessed it, Warren Buffett, who had a $151 billion stake in the company. We will talk about Warren Buffett’s stake in Apple in the second part of this article.
Loop Capital recently reduced its rating for Apple Inc. (NASDAQ:AAPL) citing the company’s decreased targets for iPhone shipments for June. However, the firm kept its price target of $180 on the stock.
The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 95
Kanye West had gifted around 950 shares of The Walt Disney Company (NYSE:DIS) to Kim Kardashian back in December 2017. The Walt Disney Company (NYSE:DIS) was trading at around $108 at that time. Today, Disney’s stock price is $90.77. Clearly, it wasn’t a wise bet from Kanye, since the stock posted losses of about 15% during this period.
Nevertheless The Walt Disney Company (NYSE:DIS) remains one of the most popular stocks among elite hedge funds in America and analysts believe the stock has a strong potential to grow. Insider Monkey’s database of 943 hedge funds shows that 95 hedge funds had stakes in the company as of the end of March this year. The most significant shareholder of the company was Trian Partners of Nelson Peltz which owns a $592 million stake in the company.
Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 108
Back in 2017, when Kanye West gifted Netflix, Inc. (NASDAQ:NFLX) shares to Kim Kardashian, the streaming company was looking like it won’t ever see a decline. Everyone was flocking to Netflix, Inc. (NASDAQ:NFLX) and the company was the dominant player in the industry. Its subscribers were growing exponentially. The stock was trading at around $532 near the end of December 2017. Fast forward to today, the stock has plummeted to $400, as the company started to lose subscribers to competitors and faced growth challenges. Since December 2017 the stock has lost about 25%.
Bloomberg recently reported that Netflix, Inc. (NASDAQ:NFLX) shareholders have rejected compensation packages for the company’s top executives.
To continue reading and see the winner of this competition click Kanye West VS Warren Buffett: Who Wins?
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Disclosure: None. Kanye West Stock Portfolio vs. Warren Buffett Stock Portfolio is originally published on Insider Monkey.
