Warren Buffett primarily invests in equities directly through his company, Berkshire Hathaway Inc., which is one of the most watched institutional investor portfolios in the world. As of Sept. 30, Berkshire Hathaway has over $313 billion in assets under management invested in 45 stocks.
While Buffett’s prowess in direct stock investments is widely acknowledged, a lesser-known aspect of his financial empire is Berkshire Hathaway subsidiary New England Asset Management Inc. (NEAM). Acquired in 1998, New England Asset Management operates discreetly but is a crucial driving force behind Berkshire Hathaway's growth.
Total Assets Under Management
On June 19, 1998, Berkshire Hathaway announced its plans to purchase worldwide reinsurance firm General Re for $22 billion. Although General Re’s reinsurance division stood out as the primary motivator for Buffett’s decision to pursue the acquisition, the company also boasted a distinctive investment services sector recognized as New England Asset Management.
The completion of the all-stock transaction took place in December 1998, marking the integration of General Re, along with all its subsidiaries, including NEAM, into the Berkshire Hathaway family.
New England Asset Management has approximately $68.4 billion in assets under management, as of Sept. 30. However, according to NEAM's latest Securities and Exchange Commission (SEC) filing, the company's total investments are valued at nearly $610 million.
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NEAM's Biggest Holdings
Microsoft Corp.
Microsoft Corp. MSFT was one of the best-performing tech companies in 2023, with its growth strategies lauded by analysts nationwide. The tech behemoth established itself as the third-largest gaming company in the world in terms of revenue by acquiring Activision Blizzard last year. Microsoft's strategic investment in OpenAI in 2019 paid off after the latter's generative AI platform ChatGPT became one of the fastest-growing consumer applications in history.
Microsoft's explosive growth last year propelled it to become the largest company in the world in terms of market capitalization, dethroning Apple Inc. AAPL. Shares of Microsoft have popped by nearly 65% over the past year.
Nonetheless, analysts forecast further upside for the tech giant, as Truist Securities has a Buy rating on Microsoft with a price target of $600, indicating a potential upside of over 50%. Exane BNP Paribas also has an Outperform rating on the stock, with a price target of $471, which indicates a potential upside of over 17%.
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New England Asset Management has a sizable stake in Microsoft, as it makes up approximately 2.1% of its total portfolio.
Cisco Systems
New England Asset Management's total holding of Cisco Systems Inc. CSCO stock accounts for over 1.7% of its total portfolio. The company, which is hailed as the largest manufacturer of computer networking equipment in the world, acquired cybersecurity software company Splunk Inc. in September to strengthen its foothold in the cybersecurity space.
Shares of Cisco have underperformed compared to the benchmark Nasdaq Composite Index, as it surged by only 8% over the past year. However, Cisco has significant growth potential as Chairman and CEO Chuck Robbins expects it to "become one of the largest software companies globally."
"Our combined capabilities will drive the next generation of AI-enabled security and observability," Robbins said in a statement. "From threat detection and response to threat prediction and prevention, we will help make organizations of all sizes more secure and resilient."
Analysts expect Cisco's earnings per share EPS to grow at a compounded annual growth rate (CAGR) of 6.4% per annum over the next five years.
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