When it comes to famous investors whose movements others watch like hawks, Warren Buffett stands in a league of his own. As one of the world’s richest people, the 94-year-old “Oracle of Omaha” remains CEO of Berkshire Hathaway. New York Stock Exchange: BRK.A. The company owns several large companies in insurance, railways and utilities. It also maintains a large investment portfolio.
As of Q3 2024, the portfolio is valued at approximately $266 billion. The holdings are generally accepted to be the stock picks of Buffett himself. Below, I’ll break down the two best-performing stocks and the two worst-performing stocks from Berkshire Hathaway Fourth quarter 2019 13F filing. For simplicity, I will look at investments that made up 1% or more of the total portfolio allocation at that time. All revenue figures are as of the close of January 6.
The Bad: Southwest Airlines and its charter carrier are disappointing
I’ll start by getting Buffett’s two worst picks out of the way. In the past five years, Southwest Airlines New York Stock Exchange: LOVE And the Communications Charter Nasdaq:CHTR They finished last and second to last. They provided total returns of -30% and -34% respectively. One positive note is that the negative performance of these names is an anomaly. No other holding that made up 1% or more of the portfolio at that time had a negative total return over the past five years. So, what made these stocks such a poor investment?
Southwest Airlines Today
Southwest Airlines
As of 03:58 PM ET
- 52 week range
- $23.58
▼
$36.12
- Dividend yield
- 2.20%
- Price target
- $32.55
Starting with the South West region, one obvious reason for its terrible performance is the Covid-19 pandemic. It is not at all helpful that this analysis began before the epidemic reached its peak. Southwest is by no means unique in its poor performance when looking at its industry. No U.S. passenger airline stock came close to making a comeback from the broader market during this period. Among nine mid- or large-cap U.S. airline stocks, the average return over this period was -11%. Overall, it’s hard to blame Buffett for this choice, given that it was the result of an event that no one expected. It’s probably a good thing Buffett exits the position by the second quarter of 2020. The stock hasn’t recovered much since then.
Communications Charter Today
Charter Communications
As of 04:00 PM ET
- 52 week range
- $236.08
▼
$415.27
- P/E ratio
- 10.89
- Price target
- $384.42
It’s easier to be more critical of the other worse-performing company, Charter Communications.
Berkshire continued to hold shares, although its allocation was significantly reduced.
Over the past five years, streaming services have crushed cable and traditional media stocks as more people use them.
Buffett’s contrarian bet on cable with Charter Communications didn’t pan out.
The good: Apple and American Express take the cake
The best-performing stock in Berkshire Hathaway’s portfolio as of Q4 2019 was tech giant Apple Nasdaq: Apple And the American Express credit card company New York Stock Exchange: EXP. Apple’s five-year total return of 237% over that time beats the S&P 500 by about 140%. Fortunately for Berkshire, Apple has always been its largest portfolio. It reached more than 50% of total assets in the second quarter of 2023.
Apple today
As of 04:00 PM ET
- 52 week range
- $164.07
▼
$260.10
- Dividend yield
- 0.41%
- P/E ratio
- 39.84
- Price target
- $237.64
Since fiscal year 2019, Apple has grown its revenue by 50% and increased its adjusted earnings per share (EPS) by 127%. Adding to the impressive rise in the company’s valuation is the nearly 45% expansion in its price-to-earnings (P/E) multiple since the start of 2020.
It is reasonable to suggest that although Buffett did not have any investments in streaming companies, he implicitly did so. This comes via the Apple TV+ streaming service, which launched in November 2019. Berkshire’s portfolio maintains a 26% allocation to Apple as of its most recent 13F filing. Interestingly, it is currently the only one among the Magnificent Seven stocks to which the company has an allocation of 1% or more. Amazon Nasdaq: AMZN It is the only other Mag Seven name in the portfolio, with a 0.7% allocation.
Goldman Sachs Group New York Stock Exchange: A Technically, it was the second best performer from the Q4 2019 portfolio, with a total return of 182%. Unfortunately, Berkshire liquidated the position in the second quarter of 2020.
American Express today
American Express
As of 03:58 PM ET
- 52 week range
- $177.81
▼
$307.82
- Dividend yield
- 0.93%
- P/E ratio
- 22.23
- Price target
- $272.64
The next big winner, which is still in the portfolio today, is American Express. It has a five-year total return of 160%. It is currently Berkshire’s second-largest holding, with a 15% allocation.
Using consensus Q4 2024 earnings estimates, the company will have grown adjusted EPS 66% since fiscal 2019. the total US credit card debt 26% higher now than at the end of 2019, which means… Significant tailwinds for the company during this period. In addition, American Express has one of Lowest 30-day delinquency rates In its manufacture.
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