Warren Buffett is increasingly willing to dump his lousy stocks. But there's a group of beloved S&P 500 stocks he still stubbornly refuses to part ways with.
Just 21 stocks in Berkshire Hathaway's just-disclosed year-end 50-stock portfolio, including Apple, Bank of America, American Express and Coca-Cola, remained in his storied portfolio over the past five years, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
The fact Buffett has hung onto to these so long says something. He's dumped 37 of the 58 stocks, or nearly 60%, of all the stocks he owned just five years ago, the data shows.
"The very largest in the portfolio tend to remain quite stable," said Stephen Biggar, strategist at Argus Research. "I think they check a lot of boxes for Berkshire in terms of the growth profile, shareholder returns, steady through most types of economic environments."
S&P 500 Stocks Good Enough For Buffett To Keep
It's somewhat puzzling why Buffett is willing to hang onto some those 21 stocks so long. They're not all solid performers.
In fact, the 21 stocks still in the Berkshire Hathaway portfolio after five years are only up an average of 43.9% in that time. That lags the 50.9% rise of the S&P 500 during that time.
But some of the monster winners Buffett won't sell more than make up for any of the losers.
Take Apple, Berkshire's largest single U.S.-listed holding that accounts for 40% of the portfolio's value. Shares are up more than 260% over the past five years. And that doesn't even include the 0.6% annual dividend yield. Berkshire has been accumulating Apple shares since the first quarter 2016. Berkshire now owns 5.6% of the company.
It's also not hard to question Buffett's loyalty to American Express. Shares are up 85% over the past five years. American Express is the fourth-most valuable position in Berkshire Hathaway's portfolio. Buffett also owns a commanding 20% stake of the company, making Berkshire Hathaway the largest owner.
Why isn't Buffett cashing in on such longtime winners? Taxes certainly have something to do with it: "In most cases it is low cost basis ..." said Greggory Warren, analyst at Morningstar.
What Is Buffett Thinking?
Buffett's loyalty to Bank of America, though, is more curious. Shares of the bank are only up 11.2% over the past five years. Nonetheless it remains Berkshire's No. 2 most valuable position. And he owns a bigger slice of that company, 12.6%, than Apple. He's been holding BofA stock since the second quarter of 2007.
And some stocks Warren won't sell are total dogs. Berkshire Hathaway still owns 26.6% of Kraft Heinz despite the S&P 500 food stock being an utter disaster. Shares are down 44% in the past five years. And they're off 2.6% just this year. Berkshire first took a position in the stock in 2012.
The fact he's still long on it might tell S&P 500 investors something about his thinking.
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S&P 500 Stocks Aren't Forever With Buffett
Buffett is known for owning stocks "forever." But lately he's shown he's willing to cut bait on stocks not working out.
Just last quarter, he unloaded nearly all his shares of Taiwan Semiconductor and before that he dumped his position in Verizon.
Less patience with some stocks is a sign of the changing of the guard at Berkshire Hathaway, Biggar says.
"Buffett used to buy only what he was comfortable with personally, but as his heir apparent portfolio managers have more say, Berkshire has been more active for example in technology," Biggar said. "And I would argue (Berkshire Hathaway) has taken a more nimble approach so you do see rotation among the lower holdings. So a core strategy among the very large holdings and satellite approach among smaller holdings."
Buffett's Largest Long-Term Holdings
Top 10 Berkshire Hathaway positions held since 2017
| Company Name | Ticker | Position value ($ billions) | 5-year ch. | Year-to-date ch. | Sector |
|---|---|---|---|---|---|
| Apple | $137.1 | 259.5% | 19.3% | Information Technology | |
| Bank of America | 35.9 | 10.8 | 6.9 | Financials | |
| American Express | 27.4 | 84.5 | 20.9 | Financials | |
| The Coca-Cola | 23.8 | 32.6 | -6.2 | Consumer Staples | |
| The Kraft Heinz | 12.9 | -43.9 | -2.4 | Consumer Staples | |
| Moody's | 7.6 | 80.9 | 9.2 | Financials | |
| DaVita | 2.9 | 13.2 | 11.6 | Health Care | |
| VeriSign | 2.7 | 72.7 | 1.3 | Information Technology | |
| General Motors | 2.1 | 5.4 | 28.8 | Consumer Discretionary | |
| Visa | 1.9 | 86.1 | 9.1 | Information Technology |
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
