Warren Buffett Just Spent $2.6 Billion Buying 6 Different Stocks for Berkshire Hathaway’s Portfolio. Here’s the Best of the Bunch.
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Warren Buffett hasn’t seen very many compelling opportunities in the stock market over the past year. In 2024, he and his fellow portfolio managers at Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) sold over $143 billion worth of equities. The holding company divested massive portions of its stakes in household names including Apple and Bank of America.
The vast majority of the proceeds from those stock sales went to pay a record tax bill and add to a growing pile of cash and Treasury bills. But Buffett made one thing clear in his letter to shareholders in February: “Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned.”
To that end, Buffett was able to invest about $2.6 billion of Berkshire’s assets in six publicly traded equities in the fourth quarter. Here’s what investors need to know and which one presents the best opportunity right now.
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Berkshire Hathaway reported a net increase in stock purchases of about $3.4 billion in the fourth quarter. But not every equity purchase Berkshire makes is a publicly traded U.S. company. Buffett said it also increased its Japanese investments in the quarter, and it may have bought other non-marketable equities.
Here are the six publicly traded U.S. stocks Buffett and his team added to in Berkshire Hathaway’s portfolio and how much they spent buying shares.
The six publicly traded stocks Berkshire added to its portfolio in the fourth quarter all have one notable thing in common. None of them have particularly large market capitalizations. The biggest of the bunch, Occidental, has a market value of $43.7 billion as of this writing. Sirius XM has a market cap of just $7.7 billion.
Berkshire Hathaway notably already holds substantial portions of Occidental, Sirius XM, and VeriSign, which has a $22.1 billion market value. And with the relatively small market caps of the other appealing investments, Buffett has struggled to invest very much cash recently. There’s simply not enough room in the market for those stocks for Buffett and his team to make a big acquisition, considering they’re managing over $600 billion in total investable assets.
That speaks to Buffett’s insistence on value and the challenges facing Berkshire’s sizable portfolio. “There remain only a handful of companies in this country capable of truly moving the needle at Berkshire,” Buffett wrote in his 2023 letter to shareholders. “Some we can value; some we can’t. And, if we can, they have to be attractively priced.”
The good news for individual investors is they typically don’t manage nearly as much money as Buffett. That means a small or mid-cap stock like the six above can become a substantial portion of your portfolio if you want. And one of Berkshire’s six buys from last quarter stands out as an attractive option right now.
All six of the stocks above present appealing value for their shares, and the companies all have strong competitive moats. They are pretty typical Buffett stocks. But the newest addition to the portfolio, Constellation Brands, might be the best value stock of the group.
Constellation Brands is the largest brewer of Mexican beer. Its brands, Corona and Modelo, dominate the U.S. market for Mexican lagers. It also owns a wine and spirits business, but it doesn’t have significant brand strength in those categories. Its the beer business that runs the show at Constellation, and it accounts for over 80% of sales and operating income.
The alcohol industry has faced several headwinds recently. The U.S. surgeon general has proposed putting health warning labels on alcohol. Gen Z doesn’t drink as much as previous generations at their age. And beer, in particular, faces the challenge of competing with ready-to-drink cocktails.
Nonetheless, Constellation has managed to steadily grow its beer sales, forecasting 4% to 7% sales growth for fiscal 2025, which just ended in February. What’s more, it expects its operating margin to expand thanks to its premiumization strategy.
It’s positioning its beer brands as more premium options, effectively using its massive advertising budget. Its scale has played an important role in that regard, as it gives it a much bigger advertising budget than competing Mexican breweries. That creates a virtuous cycle where it’s able to spend more on reinforcing its brand messaging and therefore able to maintain premium pricing while dominating the market.
Buffett bought shares of Constellation before it reported third quarter earnings. Those results were disappointing, with a 14% drop in wine and spirits sales completely offsetting the growth of the beer business. Management lowered its full-year outlook as a result. The stock has further been beaten down by the new 25% tariff against Mexico, which could hurt sales and profit margins.
Still, the underlying business looks strong for the long run and it offers great value for investors. After the drop in share price, the stock trades for just 12.4 times forward earnings estimates, as of this writing. Considering the long-term competitive advantages of Constellation’s beer business, that makes it stand out as one of the best Buffet stocks to buy right now.
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Bank of America is an advertising partner of Motley Fool Money. Adam Levy has positions in Apple. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, Domino’s Pizza, and VeriSign. The Motley Fool recommends Constellation Brands and Occidental Petroleum. The Motley Fool has a disclosure policy.
