In this article, we discuss Warren Buffett’s top 10 stock picks.
Warren Buffett, the 91-year-old fund manager of Berkshire Hathaway, is one of the most-watched investors in the world. The legendary investor is the brain behind the $294.4 billion portfolio of Berkshire Hathaway, which has averaged a 20% annual return. The billionaire investor is well-known for finding undervalued equities that have a solid business foundation, little or no debt, and have a competitive yet sustainable profit margin. The Oracle of Omaha is one of the world’s richest individuals, with a personal net worth of $101 billion.
Some of the top stocks in Berkshire Hathaway’s portfolio in Q3 2021 included Apple Inc. (NASDAQ:AAPL), Bank of America Corporation (NYSE:BAC), American Express Company (NYSE:AXP), and The Coca-Cola Company (NYSE:KO). Berkshire Hathaway’s top ten holdings remained unchanged in the third quarter, according to 13F filings tracked by Insider Monkey, with the exception of reduced stakes in U.S. Bancorp (NYSE:USB).
Our Methodology
In this article, we will take a look at Berkshire Hathaway’s top ten holdings as of the third quarter of 2021. We selected stocks that accounted for the biggest portion of the portfolio of Warren Buffett.
We used data from 867 hedge funds tracked by Insider Monkey to rank the stocks on our list.
With this context in mind, here’s our list of Warren Buffett’s top 10 stock picks.
Warren Buffett’s Top 10 Stock Picks
10. The Bank of New York Mellon Corporation (NYSE:BK)
Percentage of Berkshire Hathaway’s 13F Portfolio: 1.27%
Berkshire Hathaway’s Stake Value: $3,751,012,000
Number of Hedge Fund Holders: 46
The Bank of New York Mellon Corporation (NYSE:BK) is one of the most valuable holdings in Warren Buffett’s portfolio with 72.3 million shares worth $3.75 billion as of the end of the September quarter. The banking firm offers investment, wealth management, and insurance services.
Year to date, The Bank of New York Mellon Corporation shares increased 36%. The company’s revenue in the third quarter came in at $4.04 billion, an increase of 5% year over year, and beat estimates by $88.4 million. The New York-based banking firm announced the acquisition of California-based direct indexing solutions provider Optimal Asset Management in early December.
At the end of the third quarter of 2021, 46 hedge funds in the database of Insider Monkey held stakes worth $4.6 billion in The Bank of New York Mellon Corporation, compared to 52 the preceding quarter worth $4.9 billion.
Just like Apple Inc., Bank of America Corporation, American Express Company, and The Coca-Cola Company, The Bank of New York Mellon Corporation is one of the valuable stocks held by Warren Buffett as of Q3 2021.
9. DaVita Inc. (NYSE:DVA)
Percentage of Berkshire Hathaway’s 13F Portfolio: 1.43%
Berkshire Hathaway’s Stake Value: $4,196,471,000
Number of Hedge Fund Holders: 39
DaVita Inc. (NYSE:DVA) is a kidney dialysis provider and one of the largest healthcare companies operating in the $91 billion hemodialysis market. As of the third quarter of 2021, the Colorado-based dialysis company treated 241,600 patients in 3,155 outpatient centers in the US and ten countries abroad. During the same period, the company opened nine new dialysis centers and acquired one in the US.
The healthcare stock has underperformed in the recent quarters but is up 54% in the last three years. Additionally, Berkshire Hathaway owns $4.2 billion worth of DaVita Inc. shares as of Q3 2021, up from $3.09 billion in Q3 2020. Berkshire Hathaway first invested in DaVita Inc. in Q4 of 2011 with 5.37 million shares, and as of Q3 2021, the fund’s stake had grown to 36.1 million shares.
On October 28, DaVita Inc. reported its Q3 2021 earnings and had a revenue of $2.94 billion, topping the consensus by $23.5 million. Deutsche Bank analyst Pito Chickering maintained a Buy rating on DaVita Inc. with a price target of $150 on November 17.
By the end of the third quarter of 2021, 39 hedge funds had stakes in DaVita Inc., the same in the preceding quarter.
8. U.S. Bancorp (NYSE:USB)
Percentage of Berkshire Hathaway’s 13F Portfolio: 2.56%
Berkshire Hathaway’s Stake Value: $7,514,279,000
Number of Hedge Fund Holders: 42
U.S. Bancorp is a financial services holding firm based in Minnesota. The banking firm provides consumer, business, investment services, and wealth management. As of Q3 2021, the bank held $567 billion in assets.
With over 126 million shares worth $7.5 billion, U.S. Bancorp is one of the biggest holdings of Warren Buffett’s Berkshire Hathaway as of the end of September. Buffett scaled back his holdings in U.S. Bancorp in the third quarter by 2%, marking the fourth quarter in a row that Berkshire Hathaway has reduced its position in the stock.
Overall, 42 funds of the 867 elite funds tracked by Insider Monkey reported owning stakes in the Minnesota-based company at the end of September 2021, up from 41 in Q2 2021.
The company had revenue of $5.9 billion and a net income of $2 billion in the third quarter of 2021. In late November, U.S. Bancorp received an Equal Weight rating with a price target of $63 from Stephens analyst Terry McEvoy.
7. Verizon Communications Inc. (NYSE:VZ)
Percentage of Berkshire Hathaway’s 13F Portfolio: 2.92%
Berkshire Hathaway’s Stake Value: $8,578,115,000
Number of Hedge Fund Holders: 57
Comprising 2.92% of Berkshire Hathaway’s portfolio, Verizon Communications Inc. (NYSE:VZ) is one of Warren Buffett’s top stock picks. Aside from offering mobile and internet services, the New Yok-based telecom company was also the first to launch a commercial 5G network in the world in 2019. Verizon Communications Inc. reported that more than 25% of wireless phone customers had 5G-capable devices at the end of the third quarter of 2021.
The company announced a normalized actual EPS of $1.41 in the third quarter, beating estimates by $0.05. The New York-based communication company gained more attention from market analysts. Cowen analyst Colby Synesael increased his price target for Verizon Communications Inc. to $71 from $68 in October. Even with an improved sales outlook for the rest of the year, Synesael believes the stock is currently undervalued.
The handsome dividend offered by Verizon Communications Inc. is one of the reasons income investors follow the mobility giant. The company pays an annual dividend of $2.56 per share, for a 5.05 % yield.
In late November, Verizon Communications Inc. added 20 million subscribers under its network after the company acquired TracFone Wireless from América Móvil. The transaction was valued at $6 billion.
With a total stake of $10.4 billion, 57 out of 867 hedge funds tracked by Insider Monkey owned Verizon Communications Inc. shares at the end of the third quarter, compared to 63 in the previous quarter.
6. Moody’s Corporation (NYSE:MCO)
Percentage of Berkshire Hathaway’s 13F Portfolio: 2.98%
Berkshire Hathaway’s Stake Value: $8,760,485,000
Number of Hedge Fund Holders: 58
Moody’s Corporation is one of Warren Buffett’s largest and longest-held positions. Berkshire Hathaway has owned the stock for over 20 years and it accounts for 2.98% of the fund’s holdings as of Q3 2021.
The New York-based financial services firm examines the credit risk of companies and governments. The company also provides business analytics. In early November, Moody’s Corporation acquired Bogard AB, a Nordic politically exposed person (PEP) data company for an undisclosed term. Bogard AB will be an arm of Moody’s Corporation’s (NYSE:MCO) analytics segment.
Moody’s Corporation reported an EPS of $2.69 in the third quarter of 2021, beating estimates by $0.14. The stock gained 34.6% year to date.
Moody’s Corporation is one of Warren Buffett’s top holdings along with Apple Inc., Bank of America Corporation, American Express Company, and The Coca-Cola Company
In the Q2 2021 investor letter of Qualivian Investment Partners, the fund mentioned Moody’s Corporation and discussed its stance on the firm. Here is what the fund said:
“Moody’s: Revenue, operating profit margins, and EPS all exceeded expectations, and annual guidance for these items (and for free cash flow) was raised. In MIS (Moody’s Investors Service) which houses the traditional rating business, the outlook for debt issuance was raised for the remainder of the year, while MA (Moody’s Analytics) also came in ahead of expectations. The company leveraged strong revenue growth with strong operating profit margin improvement of 200 bps, with EPS coming in $0.22 ahead of consensus estimates. Management alluded to having interesting opportunities in their M&A pipeline, which we will have to assess when the time comes, but Moody’s management team has been very effective at allocating capital in the past toward value-creating bolt-on acquisitions, especially in their Moody’s Analytics business, a key growth driver for the company.”
5. The Kraft Heinz Company (NASDAQ:KHC)
Percentage of Berkshire Hathaway’s 13F Portfolio: 4.08%
Berkshire Hathaway’s Stake Value: $11,989,874,000
Number of Hedge Fund Holders: 33
The Kraft Heinz Company (NASDAQ:KHC) is an American food and beverage company. Among its most popular brands are Jell-O, Kool-Aid, Capri Sun, Lunchables, Heinz, and TGI Fridays.
The Kraft Heinz Company topped analyst revenue estimates by $241 million when the company announced a $6.32 billion in sales in Q3. According to BofA analysts, the company’s pricing contributed to greater organic sales and $1.2 billion in adjusted EBITDA.
The blue-chip stock is one of Warren Buffett’s top stock picks as the food company offers a handsome dividend yield of 4.59%.
Berkshire Hathaway is the leading shareholder of The Kraft Heinz Company, with 325 million shares worth $11 billion as of the end of the third quarter of 2021. Overall, there were 33 funds that had a stake in the food company between June and September. The total value of this stake is $12.3 billion.
4. The Coca-Cola Company (NYSE:KO)
Percentage of Berkshire Hathaway’s 13F Portfolio: 7.15%
Berkshire Hathaway’s Stake Value: $20,988,000,000
Number of Hedge Fund Holders: 61
Warren Buffett has held The Coca-Cola Company since 1988. At the end of the third quarter of 2021, the hedge fund owned 400 million shares of the Atlanta-based company, accounting for 7.15% of the fund’s total holdings.
At the end of the September quarter, 61 funds out of the 867 tracked by Insider Monkey had stakes in The Coca-Cola Company, compared to 62 in the previous quarter.
The beverage giant announced in early November its acquisition of a New York-based sports drink company BodyArmor SuperDrink. The Coca-Cola Company initially acquired a 15% stake in the energy drink company in 2018 and recently paid $5.6 billion to buy the remaining 85% of BodyArmor. Following this, Morgan Stanley analyst Dara Mohsenian maintained a $65 price target for The Coca-Cola Company with an Overweight rating.
3. American Express Company (NYSE:AXP)
Percentage of Berkshire Hathaway’s 13F Portfolio: 8.65%
Berkshire Hathaway’s Stake Value: $25,399,340,000
Number of Hedge Fund Holders: 57
Berkshire Hathaway is the biggest stakeholder of American Express Company as of the end of the September quarter. Warren Buffett’s conglomerate owned nearly 152 million shares of the stock worth $25 billion between June and September. According to the 13F filings tracked by Insider Monkey, the value of Berkshire’s holding in American Express Company has climbed by nearly $10 billion from a year ago as the stock returned 30% in the last twelve months.
Overall, 57 funds of the 867 elite funds tracked by Insider Monkey reported owning stakes in the New York-based company at the end of the third quarter of 2021.
In October, the New York-based credit card company announced its Q3 earnings and the company’s year over year revenue climbed 25% to $10.9 billion. The increase in sales in the third quarter is supported by a 19% boost in consumer and small business spending on goods and services. CEO Stephen Squeri of American Express Company recently announced that the bank’s operations performed better in October and November than in Q3, a trend he expects to persist into 2022.
Meanwhile, Deutsche Bank analyst Meng Jiao kept a Buy rating on American Express Company on October 25 post-earnings result. Jiao increased his price target for the bank stock to $200 from $190 previously.
In the Q2 2021 investor letter of ClearBridge Investments, the fund mentioned American Express Company and discussed its stance on the firm. 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 consumers 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.”
2. Bank of America Corporation (NYSE:BAC)
Percentage of Berkshire Hathaway’s 13F Portfolio: 14.61%
Berkshire Hathaway’s Stake Value: $42,878,771,000
Number of Hedge Fund Holders: 72
Bank of America Corporation is Berkshire Hathaway’s second-largest holding. At the end of the September quarter, the bank stock represents 14.6% of Warren Buffett’s portfolio. Overall, there were 72 hedge funds that held a total stake of $46.5 billion in the company in the third quarter of 2021.
The company’s profit increased 58% to $7.7 billion in the third quarter, indicating that the bank’s borrowing business is beginning to recover from a pandemic lows. Total revenue at the end of the September quarter grew 12% year over year to $22.8 billion and beat revenue estimates by $1.16 billion.
On November 23, Piper Sandler analyst Jeffery Harte increased his price target for Bank of America Corporation to $53 from $50. According to Harte, BAC has demonstrated the ability to gain market share efficiently while generating higher risk-adjusted returns. The analyst kept an Overweight rating on the bank stock.
In its Bill Nygren third-quarter 2021 market commentary, Oakmark Funds mentioned Bank of America Corporation and discussed its stance on the firm. Here is what the fund said:
“Earlier this year, one of our holdings, Bank of America, announced that it was raising its minimum hourly wage from $15 to $20 and would increase it to $25 by 2025. The company received great press for placing the well-being of its employees above profits. But was it really either/or? Bank of America’s chief human resources officer spoke to the bigger picture: “A core tenet of responsible growth is our commitment to being a great place to work…that includes providing strong pay and competitive benefits to help them and their families so that we continue to attract and retain the best talent.” Bank of America understood that engaged, high-caliber employees are more productive, less prone to turnover and, therefore, less expensive in the long run. Increasing the pay for employees wasn’t elevating employees above shareholders; it was the right thing to do for employees and for shareholders.
If an increase to $20 was good, why stop there? Why not $50 per hour? Because the benefits the business receives a $50 don’t justify the expense. The bank would no longer be able to price its products competitively and would lose business. The employees would “win” in the short term, but eventually, the lost business would lead to job cuts, meaning both employees and shareholders would lose. The negative effects of stakeholder overreach are no different than when CEOs overreach to inflate short-term profits. Both hurt shareholders and stakeholders.”
1. Apple Inc. (NASDAQ:AAPL)
Percentage of Berkshire Hathaway’s 13F Portfolio: 42.77%
Berkshire Hathaway’s Stake Value: $125,529,681,000
Number of Hedge Fund Holders: 120
Warren Buffett’s fund began purchasing Apple Inc. in late 2016. It owns about 887 million shares of the company worth $125 billion as of the end of the third quarter of 2021. The iPhone maker accounts for 42.77% of the fund, making it the most valuable position in Berkshire Hathaway’s portfolio.
Wedbush analyst Daniel Ives is optimistic about Apple Inc.’s (NASDAQ:AAPL) fiscal Q1 results. Ives believes that the tech giant could sell 40 million iPhones between Black Friday weekend and Christmas. The Wedbush analyst recently stated that there is a 60% to 65% chance that Apple will unveil its own autonomous vehicle by 2025. On November 26, Ives maintained an Outperform rating on the tech stock with a price target of $185.
In the quarter that ended in September, the California-based tech company’s revenue came in at $83.4 billion, up 29% year over year.
Despite a drop in the number of hedge funds holding Apple Inc. in the third quarter, the stock remains one of the most valuable tech stocks among institutional investors. At the end of September, 120 of the 867 funds tracked by Insider Monkey had stakes in the company, compared to 138 the previous quarter.
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This article is originally published at Insider Monkey.
