Berkeley Investment Magnate, Warren Buffet, Liquidates $133 Billion in Shares this Year; Discloses Two Exceptions
Berkeley Investment Magnate, Warren Buffet, Liquidates $133 Billion in Shares this Year; Discloses Two Exceptions
Warren's Berkshire Hathaway (BRK.A 0.23%, BRK.B 0.33%) has been offloading stocks at a burgeoning pace in 2024. This year alone, the company has disposed of $133 billion worth of stocks, largely due to the sale of its Apple and Bank of America holdings.
Listed below are Berkshire Hathaway's top four investments at the end of Q3 and their respective market values:
- Apple: $69.9 billion
- American Express (AXP 0.05%): $41.1 billion
- Bank of America: $31.7 billion
- Coca-Cola (KO -0.44%): $28.7 billion
Buffett implied at the 2024 Berkshire Hathaway shareholders' meeting that he finds the idea of amplifying the company's cash reserves quite appealing with the stock market hitting record highs. Valuations are currently high, which has narrowed the pool of companies selling at economical prices.
Buffett's reluctance to sell shares in Coca-Cola and American Express is noteworthy. While he divests from Apple and Bank of America, he has steadfastly held on to his Coca-Cola and American Express shares for over 25 years without a single sale.
1. Coca-Cola
Coca-Cola is one of Berkshire Hathaway's longest-held investments, with its initial purchase occurring in the late 1980s. Buffett continued accumulating shares in 1994. Even after numerous stock splits, Berkshire still holds an impressive 400 million shares, worth $28.7 billion at Q3's end.
Buffett values Coca-Cola for its powerful brand. Despite the shift in consumer preferences away from sugar-laden beverages, Coca-Cola has managed to foster growth across various product categories such as water, tea, coffee, energy drinks, and carbonated beverages. The company boasts over 2 billion daily servings, reflecting consistent revenue and profits.
Coca-Cola shares reached a 52-week high of $73 but have since dropped to $64. The drop in price has brought the stock's forward dividend yield to an appealing 3%. With a robust growth potential and a juicy dividend, Coca-Cola is undeniably a tempting purchase during this price dip.
Coca-Cola's shares fell after reporting a 1% year-over-year decline in unit case volumes. While macroeconomic headwinds have prompted uncertain consumer spending, this is a short-term issue that Coca-Cola has navigated successfully in the past.
Coca-Cola has paid a growing dividend for 62 consecutive years. Currently, the quarterly dividend is $0.485 per share, representing 68% of expected full-year earnings. Berkshire will receive $776 million in dividends over the next year, making it a savvy investment with steady annual sales and a considerable payout.
2. American Express
American Express has been a part of Berkshire Hathaway's portfolio for 30 years, with Buffett last augmenting his position in 1998. As of Q3, the company held just under 151 million shares context worth $41 billion.
Buffett admires American Express for its striking brand power. The company benefits from cardholders' tendency to spend more than average on other credit card brands, thereby gaining from the expansion of the economy. Its spend-centric business model translates into investors earning a royalty on consumer spending.
Despite recent economic turbulence, American Express has recorded solid financial results. Third-quarter revenue soared, posting an 8% year-over-year increase. The stock has climbed to near new highs, with investors bullish about the company's prospects.
American Express has been successful with its chic revamp of cards and benefits. The company unveiled 40 refreshed cards and member benefits throughout Q3, including new dining perks for the U.S. Consumer Gold Card that boosted restaurant spending by 7% last quarter.
American Express has enrolled 3.3 million new customers in Q3, marking a growth from 2.9 million in the previous year. Furthermore, the retention rate of younger customers outpaces that of older generations, boding well for the company's long-term growth prospects.
Analysts predict a 9% revenue boost and a 24% increase in earnings for American Express in 2024. Although the stock trades at a relatively high 22-times 2024 earnings estimates, it is an investment that has historically rewarded Buffett.
Buffett is considering investing more money into Berkshire Hathaway's finance-related holdings, recognizing the current high stock market valuations and the limited number of economically priced companies. Despite offloading Apple and Bank of America shares, Buffett continues to hold onto his Coca-Cola and American Express investments due to their strong brands and consistent performance.
Investors might find American Express appealing, given its strong brand power, substantial revenue growth, and impressive customer retention rates. Buffett, who has maintained a long-term position in American Express for three decades, believes in the company's ability to generate returns even during periods of economic turbulence.