Buffett’s top ten positions have a yield of 43%, which is nearly twice that of S & P 500, and newly bought Kroger Supermarket and Bojian Bio.
Editor’s note: This article comes from “ Huasheng “, author: Oliver
With the release of Buffett’s letter to shareholders, the same as in previous years, the biggest concern of all people who eat melon is whether Buffett has achieved amazing returns again. Although Berkshire’s compound annual growth rate has reached 20.3% since 1965, Berkshire’s book value per share has increased by 11.0% in 2019, while the S & P 500 index has increased by 31.5%, underperforming 20.5 percentage point. For a moment, the news of the stock market’s underperforming spread across the major media, but is Buffett really “not working” again? I think this may be another misjudgment by the media.
I. Buffett’s Top 10 Heavy Stocks
Source: Network
According to the data from the shareholder letter, as of December 31, 2019, Berkshire Hathaway held a total market value of US $ 248.027 billion in shares, a purchase cost of US $ 110.34 billion, and a book profit of US $ 137.687 billion. Berkshire Hathaway’s top ten heavy stocks are Apple, Bank of America, Coca-Cola, American Express, Wells Fargo, United Bank of America, JP Morgan, Moody’s, Delta Air Lines and Bank of New York Mellon.
Second, changes in Buffett’s main positions
Source: Network
According to a report published on the US Securities and Exchange Commission’s (SEC) website on February 14, Buffett’s Berkshire has two new stocks, one of which is Kroger SuperCity (Kroger), the other is the global biotech industry giant-Biogen. In the supermarket chain Kroger, Berkshire disclosed 18.94 million shares, or about $ 550 million.
Kroger is the third largest retail group in the United States after Wal-Mart and Home Depot. At present, Kroger has invested heavily in expanding online business, upgrading stores, improving delivery quality, and actively competing with Walmart and Amazon.
Biogen is a well-known blue-chip biotechnology stock in the United States, ranking one of the top 10 biotechnology companies in the United States. At Biogen, a biochemical company, Berkshire disclosed 648,000 shares, or about $ 192 million. After the announcement, Biogen’s stock price rose 1.77%. Since the fourth quarter of last year, the company’s stock price has risen by 20%. Since this year, Biogen’s stock price has also risen 12.2%, exceeding the 4.6% increase of the S & P 500 index.
Berkshire also disclosed two newly held exchange-traded funds (ETFs), namely Vanguard S & P 500 ETF (VOO) and SPDR S &; P 500 ETF Trust (SPY).
Third, stocks outperformed S & P, and underperformed because of more cash.
In 2019, the one-year weighted return on the 10 largest common stock investments in Berkshire Hathaway’s portfolio is 43%. This is almost twice the 23% rise in the S & P 500 over the same period.
Although all the stocks you buy have extremely amazing yields, Buffett ’s current stock positions occupy too little of Buffett ’s total positions, so it is difficult to outperform the S & P 500, and Berkshire ’s outstanding investment portfolio ’s excess returns have been Other cash gains were partially offset. Currently, Berkshire’s cash reserves remain at $ 128.2 billion in the third quarter of 2019 and have not decreased significantly.
Four, Buffett’s stock picking trick
A close look at Buffett ’s heavy positions. The top ten heavy positions in Buffett ’s investments are all very profitable. The long-term ROEs of Apple and Coca-Cola are very high, even exceeding A-share Guizhou Moutai. Example of low ROE is Bank of America, 2012-2019The average ROE of Bank of America is only 6.2%, and Bank of America has hardly been profitable for nearly seven consecutive years.
But in the investment in Bank of America, Buffett bought the price cheap enough: Buffett bought Bank of America at a price of 0.24 times PB in 2011. In recent years, the valuation of Buffett has increased to Bank of America ’s Investment brings many benefits. Bank of America has reached 1.29 times PB in 2019, and the relatively stable business model of Bank of America is also doomed to fail easily in the long run. American Express, the fourth largest warehouse stock, has a long-term stability and maintains a high level of ROE, with an average ROE of 26% in the past 15 years.
In addition to making a lot of money, the operations of the companies that Buffett bought are also very stable. Buffett’s heavy storage industries are mainly fast-moving consumer goods (accounting for 1/4), or the financial industry (accounting for 3/4).
In this year’s “Letter to Shareholders,” Buffett once again pointed out three standards that meet his “elephant”: 1. First, he must get good returns in business; 2. Second, he must be competent Management by honest managers; 3. Finally, it must be sold at a reasonable price.
“Major acquisition opportunities that meet our criteria are rare, so when we find companies that meet these three criteria, we are more inclined to acquire completely.” Buffett said, “the capricious stock market provides us with opportunities , Giving us the opportunity to screen and buy stocks of listed companies that meet our criteria. “
Fifth, huge cash positions may represent a short-term bear market outlook for Buffett
In 1969, Buffett was struggling to find a reasonably priced investment target in the United States, dissolving all its funds, and then the stock market ushered in a huge decline. Buffett currently holds hundreds of billions of dollars in cash, accounting for about 40% of all his assets, and is also unable to get started in the US capital market. Buffett has been trying to reallocate these funds into higher-return transactions or stock purchases, but has been hampered by the “high price” of good companies.
Perhaps investors should refer to the stock selection and views of stock gods. Investment is a long life and stability is the real investment victory.
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