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Warren Buffett’s Portfolio

June 30, 2015

There is a mystique about Warren Buffett and rightly so.  He is undoubtedly the most successful investor of all time, an icon, legend and even a brand.  He is also very smart, practical and tells it as he sees it, which is usually on the mark for most of us.

However, in spite of his great success, his portfolio is not one that should be emulated.  Berkshire Hathaway’s (BRK) public share portfolio is comprised of 46 stocks with a $110 billion market value.  However, just four stocks make up 63% of that value [Coco Cola, American Express, WellsFargo and IBM].  The position in WellsFargo is worth about double each of the other three.  As to sectors, 45% of the total portfolio is in financials, 25% is in consumer staples and 13% in information technology.  He has an extremely undiversified portfolio and any advisor or investment manager might be considered negligent with such a configuration, but not the Oracle of Omaha.  Note that the sector analysis does not include the privately owned companies.

The private companies BRK owns are valued at a combination of book and fair value and not market value and employ over 340,000 people.  According to Warren, nine of them are large enough to be included on Fortune’s 500 list if they were publicly owned.  In spite of BRK’s size, its corporate office only employs 25 people.  Each company has its own management with responsibility to run the business they work for. Some of the well-known companies owned are GEICO, Benjamin Moore, Clayton Homes, Dairy Queen, Fruit of the Loom, Heinz, Johns Manville,  NetJets, Scott Fetzer, BNSF Railway and See’s Candies.

A biography I recommend is The Snowball / Warren Buffett and the Business of Life by Alice Schroeder and I particularly recommend it to young people that have an interest in investing.  Beside an engaging biography, it is a veritable how-to book on investing.  Another “book” I recommend is the BRK annual report that can be downloaded on line or obtained by writing to the Berkshire Hathaway, Inc. corporate office at 3555 Farnam Street, Omaha, Nebraska 68131.  Both books are well worth your time.

A speech I often present is “How Warren Buffett Did It: Insights into the investing history, patterns and strategies of the World’s most successful investor” and I will send the handout to anyone providing their email address.  Email me at emendlowitz@withum.com

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