In this article we discuss Warren Buffett’s 5 worst investments of all time. If you want to read our detailed analysis of these investments, go directly to Warren Buffett’s Worst Investments of All Time.
5. Anheuser-Busch InBev SA/NV (NYSE: BUD)
Number of Hedge Fund Holders: 18
Anheuser-Busch InBev SA/NV (NYSE: BUD) is a Belgium-based company that makes and sells different kinds of drinks. It is ranked fifth on our list of Warren Buffett’s worst investments of all time. The stock has returned more than 52% to investors in the past year. Buffett was the second-largest shareholder in the company when he sold his stock, representing close to 5% of the Berkshire portfolio at the time and worth over $2 billion. Buffett made $1.36 billion on the sale of the stock in the early summer of 2008.
In August 2008, Buffett appeared on CNBC and said that he had made a mistake selling the Anheuser-Busch InBev SA/NV (NYSE: BUD) shares he owned in anticipation that a takeover bid related to the firm would fail.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Anheuser-Busch InBev SA/NV (NYSE: BUD) with 8.1 million shares worth more than $503 million.
In its Q1 2020 investor letter, Broyhill Asset Management, an asset management firm, highlighted a few stocks and Anheuser-Busch InBev SA/NV (NYSE: BUD) was one of them. Here is what the fund said:
“We also diversified our beer exposure during the quarter, adding a direct investment in Ambev (ABEV) to compliment our existing investment in Anheuser Busch Inbev (BUD). As the current environment has punished highly leveraged businesses like BUD (despite the company’s ability to generate strong and recurring cash flow), the opportunity to own ABEV, with net cash on its balance sheet and the highest returns on capital in the industry—at a lower multiple than its parent—was too good to pass up.
Together, these names represent roughly 20% of our capital today. Given their cheap valuations, combined with the fact that beer and tobacco consumption has historically increased during recession, one could argue that we should have even more exposure to these Sin Stocks. In principle, we agree, and given the opportunity, we’d be happy to increase our positions. But in the interim, we are highly sensitive to maintaining balance in the portfolio. At one end, we own high quality, defensive businesses that should fare well in almost any environment. At the other end, we’ve begun building a portfolio of more cyclical businesses, positioned to rebound sharply and gain share once the clouds clear. We discuss a few of these investments below.”
