Warren Buffett's investing track record is tough to match. Since taking over as CEO and chairman of Berkshire Hathaway (BRK.A 0.77%) (BRK.B 0.86%) in 1965, he took the struggling textile company and turned it into a massive conglomerate. The share value increased from $18 then to around $580,000 today. That computes to an eye-popping cumulative return of over 3,200,000% and a compound annual growth rate of about 19.4% for the last 58.5 years.
Much of that growth is fueled by Buffett's expansion into the insurance industry and using the float provided by insurance premiums to invest in an equity portfolio (or fully purchasing businesses). So, when Buffett makes a buy or sell decision, the whole investing world pays attention. And there's one stock Buffett has been buying much more than any of the others in Berkshire's portfolio over the last five years.
Image source: The Motley Fool.
Some of the biggest purchases in the Berkshire portfolio
Buffett and his team manage a massive $373 billion portfolio. Berkshire Hathaway is required to report its U.S. holdings at the end of every quarter by filing form 13F with the Securities and Exchange Commission. Additionally, the conglomerate must report any stock purchases or sales for companies in which it owns a stake of 10% or more within three days of the trade. That gives investors a lot of insight into what Buffett's buying and selling for Berkshire.
As of its most recent reports, Apple (NASDAQ: AAPL) is by far the biggest holding in Berkshire's portfolio. The iPhone maker accounts for nearly half of the entire portfolio value. And Buffett hasn't been shy about how much he likes Apple. "It's better than any business we own," he told shareholders at their annual meeting last May.
Buffett has consistently added to Berkshire's position in Apple since its initial investment in 2016.There were a few times when Berkshire some shares for tax purposes, but Buffett later called those decisions a mistake.
While Berkshire's stake in Apple is worth around $173 billion, Buffett and his team likely spent around $40 billion establishing that position. That's a massive buy for sure, and it shows Buffett is very willing to put his money where his mouth is.
Despite the heavy weighting in Berkshire's portfolio, Buffett continues to occasionally buy more Apple shares. The most recent purchase was in the first quarter of last year.
Another stock Buffett's been piling cash into lately is Occidental Petroleum (OXY 1.23%). Berkshire Hathaway initially took a stake in Occidental by providing $10 billion in capital in exchange for 100,000 preferred shares paying an 8% dividend. Occidental used the capital to fund its purchase of Anadarko.
At the start of 2022, Buffett began building a position in Occidental's common stock. It's been one of his favorite stocks to buy over the past two years as he's grown Berkshire's stake in the company to nearly 28%. Establishing that position cost about $13.5 billion, so the total investment since 2019 has been about $23.5 billion. That said, Occidental has started redeeming some of Berkshire's preferred shares, buying back about $1.5 billion through the third quarter of last year.
While Apple and Occidental have been two of Buffett's biggest investments lately, neither comes close to the amount he's put into buying shares of his favorite stock. And investors won't find it on form 13F. They'll have to look at Berkshire's quarterly reports.
The stock Buffett's bought more of than any other
Over the last five years, Buffett's spent about $75 billion buying one stock in particular. But the value of those stock purchases doesn't show up in Berkshire's portfolio. Nonetheless, shareholders, in aggregate, are at least $75 billion wealthier as a result.
The stock Warren Buffett's been buying up like no other is, in fact, Berkshire Hathaway itself.
Berkshire Hathaway's share repurchase policy underwent a significant change in mid-2018. Previously, Buffett would only buy back shares of Berkshire if it fell below 120% of book value. However, that didn't present very many opportunities to buy back stock and proved to be overly restrictive.
The board changed the policy in mid-2018 to allow Buffett to buy shares whenever he and Charlie Munger determined the stock price was below Berkshire's intrinsic value, so long as the company kept at least $20 billion in cash and Treasuries on its balance sheet.
Since then, Buffett has gone on to repurchase shares of Berkshire Hathaway every quarter. He was especially active in buying shares in 2020 and 2021. With a whopping $157 billion in cash and equivalents on the balance sheet and a business generating billions in free cash flow every quarter, there's a very good chance Buffett will keep buying back Berkshire stock going forward.
Berkshire Hathaway shareholders benefit from Buffett's share buybacks. As Buffett reduces the number of shares outstanding, the stake of existing shareholders in Berkshire's future earnings increases. As a result, the buybacks support the company's earnings per share, which is one of the biggest determinants of its stock price. Additionally, Buffett's willingness to deploy extra cash toward buybacks means there's a big buyer willing to step in if the stock price declines, which shouldprevent the price from ever falling too far.
Adam Levy has positions in Apple. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
