Warren Buffett is the fifth-richest man in the world, according to the Forbes Real Time Billionaires Index, and one the most successful investors of this age. His company, Berkshire Hathaway Inc., reported a 40% rise in operating earnings in the third quarter. Berkshire Hathaway also reported a record $157.2 billion cash holding as of Sept. 30.
The majority of Buffett's earnings came from his insurance business, with Geico reporting total underwriting earnings of over $1 billion in the last quarter. His equity holdings, however, declined in value over the past quarter.
The primary driver behind Berkshire Hathaway's investment loss is its majority stake in tech giant Apple Inc. AAPL. Apple's shares declined by over 11% in the third quarter, causing Buffett to incur an investment loss of over $24 billion during this period.
While Buffett's total investment portfolio might have been impacted due to because of declining share prices, he has benefitted from dividend payouts in the last quarter.
"The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings (losses) per share that can be extremely misleading to investors who have little or no knowledge of accounting rules," Berkshire Hathaway said in a news release reporting its operating results.
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Some of his most reliable stock holdings include:
Coca-Cola
Buffett has credited The Coca-Cola Co. KO as his "secret sauce" for success, as it has been one of Berkshire Hathaway's most profitable investments.
The beverage producer's dividend payouts have padded Berkshire Hathaway's bottom line. Buffett, who owns 400 million shares of Coca-Cola, received dividend payments of approximately $704 million as of 2022.
"All Charlie (Munger) and I were required to do was cash Coke's quarterly dividend checks. We expect that those checks are highly likely to grow," Buffett said in a shareholder letter.
Buffett's investment in Coca-Cola amounted to $25 billion as of Dec. 31, 2022, accounting for 5% of Berkshire Hathaway's net worth as of last year.
Coca-Cola is widely regarded as a popular dividend aristocrat, as the company has raised dividends consecutively over the past 61 years. Morgan Stanley and JP Morgan Chase & Co. have an Overweight rating on Coca-Cola stock. Morgan Stanley has a price target of $65, indicating a potential upside of over 13%. JP Morgan raised its price target to $62, which reflects an of over 8%.
Bank of America
Bank of America Corp. BAC played an important role in stabilizing the U.S. banking system after the collapse of the Silicon Valley Bank and other bank runs. Buffett owns approximately 1.03 billion shares of Bank of America, accounting for 9.23% of his portfolio.
The Oracle of Omaha's total investment in Bank of America is valued at over $30 billion, making it the second-largest holding in Berkshire Hathaway's portfolio.
As the Federal Reserve gradually eases interest rate hikes, many analysts expect bond prices to recover in 2024, making banking stocks such as Bank of America generate substantial profits.
"He’s [Buffett] holding on to his Bank of America. It’s his second-largest position. Why is he doing that? Why isn’t he trimming that? Well, I’ll tell you why because next year, if we get the bond rally the way everybody expects, their net profit — their net interest margins are going to go up, and everybody’s going to be very happy," said Lee Munson, president and chief investment officer of Portfolio Wealth Advisors.
New York-based investment bank Oppenheimer & Co. Inc. holds an Outperform rating on Bank of America stock, with a price target of $51. This indicates a potential upside of over 72%. BMO Capital Markets has a Market Perform rating on the stock with a price target of $40, which reflects a potential upside of over 35%.
Occidental Petroleum
Buffett bought over 17 million shares of Occidental Petroleum Corp. OXY in the last quarter. He is a majority shareholder of Occidental with a more than 25% stake in the oil producer.
Occidental Petroleum's efforts to reduce its carbon footprint are expected to strengthen its foothold in the oil industry as countries push toward eliminating carbon emissions. Earlier this month, Occidental Petroleum partnered with BlackRock to invest in building the world's largest direct air capture facility in Texas.
Berkshire Hathaway expects to generate over $960 million in dividends from Occidental Petroleum. Buffett is slated to benefit from the rising stock price as well, as JPMorgan expects Occidental stock to hit $78, indicating a potential upside of nearly 30%.
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