Warren Buffett’s Q1’2024 stock holdings data is out and the market is inundated with excitement around the Oracle of Omaha’s favorite stock picks. But unlike many other hedge funds which are fickle and revisit their investments regularly, Buffett believes in buying stocks and then holding on to them for decades.

Buffett’s “Mystery Stock Pick” Revealed

But over the past several months the market remained guessing the name of the “mystery stock” in Warren Buffett’s portfolio he hadn’t revealed. Berkshire had requested SEC for confidentiality as it was busy buying large stakes in the company. Some said it would be Alphabet, some speculated it would be a Chinese stock (Alibaba was the favorite candidate). But many wise investors said that the stock would be from the insurance or finance industry as Buffett has time and again indicated his preference for companies that are doing what he knows the best: insurance, banks, finance.

Finally, Berkshire has revealed this mystery stock pick and it’s part of our detailed list of Top 7 Favorite Stocks of Warren Buffett for 2024.

Why Isn’t Buffett Deploying His Cash Reserves?

At the latest annual meeting of Berkshire Hathaway, Warren Buffett revealed that his firm’s cash piles had swelled to about $189 billion at the end of the first quarter, with him expecting the kitty to hit $200 billion by the end of the second quarter of 2024. This begs the question: why isn’t Buffett deploying this cash? After all he was the one who once said:

“Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.”

“No Possibility of Eye-Popping” Gains?

Buffett’s reasoning is simple: he only invests when he finds attractive deals with “eye-popping” returns, and the market today just isn’t presenting him with any worthy opportunities. In his 2023 investor letter, Buffett went as far as to say that he sees “no possibility of eye-popping performance” in the current environment.

Buffett always sticks to his core investing principle: never invest in overvalued equities. In his latest investor letter he reiterated that for him to invest in companies, they have to be “attractively priced.”

The Size Factor

Another reason Berkshire isn’t deploying cash is its size and Buffett’s inclination towards investing only for significant gains.

“Those days are long behind us; size did us in, though increased competition for purchases was also a factor. Berkshire now has – by far – the largest GAAP net worth recorded by any American business,” Buffett said in his 2023 letter.

In this article we will take a look at the top three stock picks of Warren Buffett by analyzing his Q1’2024 portfolio. To see more stocks that are top favorites of Warren Buffett, including his mystery stock, click Warren Buffett’s 7 Top Favorite Stock Picks for 2024.

American Express Co (NYSE:AXP)

Warren Buffett’s Q1 2024 Stake: $34,520,240,283

Warren Buffett has not touched his gigantic stake in American Express Co (NYSE:AXP) since 2013, which shows the trust Oracle of Omaha has in the business, which he called “hugely successful” in his 2023 letter to Berkshire shareholders, adding:

“The lesson from Coke and AMEX? When you find a truly wonderful business, stick with it. Patience pays, and one wonderful business can offset the many mediocre decisions that are inevitable.”

American Express Co (NYSE:AXP) accounted for about 10% of the total Berkshire portfolio in the first quarter of 2024 as the fund has a $34.5 billion stake in American Express Co (NYSE:AXP).

Artisan Select Equity Fund stated the following regarding American Express Company (NYSE:AXP) in its fourth quarter 2023 investor letter:

“Our top performers this quarter were American Express Company (NYSE:AXP), Expedia and Axalta. American Express saw a 26% share price gain. The business has performed well over the past year and over our holding period. While American Express’ long-term growth and attractive business model is well known and understood, the shares had been flat to down for most of the year on fears of a recession. In a recessionary environment, consumer spending slows, which impacts revenue, and credit costs go up as consumers have a harder time paying their bills. As fears about a recession receded in Q4, investors bid up American Express shares.”

Bank of America Corp (NYSE:BAC)

Warren Buffett’s Q1 2024 Stake: $39,165,748,068

Bank of America Corp (NYSE:BAC) is the second top favorite stock of Warren Buffett. The billionaire has been owning stakes in Bank of America Corp (NYSE:BAC) since the third quarter of 2017, when he bought about 69 million shares of Bank of America Corp (NYSE:BAC). As of the end of Q1’2024, this stake has swelled to over 1 billion shares.

Wolfe Research’s Steven Chubak, who had downgraded Bank of America Corp (NYSE:BAC) back in October 2021, recently turned bullish on the banking giant, upgrading the stock to Outperform from Peer Perform. Chubak thinks Bank of America Corp’s (NYSE:BAC) Q1 results show “better asset repricing trends” and he sees Bank of America Corp (NYSE:BAC) approaching “the point of NII inflection where ‘under-earning’ banks including both BAC and SCHW [Charles Schwab] should post stronger gains following multiple years of underperformance.”

Sequoia Fund stated the following regarding Bank of America Corporation (NYSE:BAC) in its fourth quarter 2023 investor letter:

“Exits last year included Netflix, Bank of America Corporation (NYSE:BAC) and Micron. As discussed in our Q1 shareholder letter, we exited our investment in Bank of America soon after making it, as our thesis was quickly undermined by the regional banking crisis and the regulatory developments that it catalyzed. We think both Bank of America and Micron were purchased at conservative prices given the facts at hand, but the facts changed and we moved on.”

Apple Inc (NASDAQ:AAPL)

Warren Buffett’s Q1 2024 Stake:$135,360,901,805

Buffett’s relationship with Apple Inc (NASDAQ:AAPL) is currently the topic of market chatter as the Oracle of Omaha cut his stake in Apple Inc (NASDAQ:AAPL) by 13%. History shows that when Buffett isn’t happy with a company, he slowly begins to slash stakes in it, ultimately removing it from its portfolio. Buffett cutting stakes in Apple Inc (NASDAQ:AAPL) got more attention as Apple Inc (NASDAQ:AAPL) faces growth challenges in iPhone sales and faces market criticism amid lack of AI catalysts.

“No” was Warren Buffett’s short answer to a question asking him whether he believed Apple Inc (NASDAQ:AAPL) as an investment was losing shine during Berkshire’s latest annual meeting.

Buffett also added that it’s “extremely likely” that Apple Inc (NASDAQ:AAPL) would be Berkshire’s “largest holding” by the end of 2024.

That means Apple Inc (NASDAQ:AAPL) is the top favorite stock of Warren Buffett, for now. But it’s also a subtle nudge to Apple Inc (NASDAQ:AAPL) management to do something about the growth problem before it loses the trust of Berkshire.

The London Company Large Cap Strategy stated the following regarding Apple Inc. (NASDAQ:AAPL) in its first quarter 2024 investor letter:

“Reduced: Apple Inc. (NASDAQ:AAPL) – Reduction reflects strong performance in 2023 and resulting elevated valuation. We believe the outlook for AAPL remains strong with slow growth in iPhone (now #1 global market share) and faster growth in the higher margin services business. R&D will continue to drive new products and AAPL now has over 2 billion installed devices around the world. While near term earnings expectations appear reasonable, we felt it was prudent to reduce the position size based on risks to valuation.”

These were just 3 of the Top Favorite Stocks of Warren Buffett.

Click to continue reading and see 7 More Top Favorite Stocks of Warren Buffett for 2024 [including Buffett’s Mystery Stock Pick]