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Breakdown of Berkshire Hathaway Portfolio in 2021 - STOCKS THAT WARREN BUFFETT HOLDS - YouTube
Channel: fu academy
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Warren Buffett is one of the most
successful investors of our lifetime.
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Since the 1960s, Buffett has been investing
through his holding company, Berkshire Hathaway.
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And in that time, the performance of Berkshire was
more than twice as high as the S&P 500 - per year!
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If you invested 100 dollars into
Berkshire in the 1960s, that money
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would be worth over a million by now.
The great thing about this portfolio is
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that you can simply invest in it by buying
the Berkshire stock, ticker symbol BRK.B.
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In this video, we will reveal
his portfolio at Berkshire.
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We will break down his largest investments
one after another and I will tell you a
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little bit about the investment and why
they could be interesting for you, too.
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This video is packed with goodness - so let’s go!
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What’s up everyone?
This is fu academy -
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your channel for financial education.
And on this channel, I share lifestyle, investing
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style and educational videos - just like this one.
So if you are new here, consider subscribing.
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So let’s see what the
Berkshire portfolio is about.
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I actually got this data from hedgefollow.com - I
will leave a link to it in the description below.
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The largest investment of Berkshire's portfolio
is Apple - making up 41.5% of the total portfolio.
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Apple is one of the largest consumer
electronics companies globally.
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They sell a variety of products like the iPhone,
iPad, Mac, Apple watch, AirPods and more.
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On top of that, Apple is also big on services like
Apple Music, iCloud, Apple Card and Apple Pay.
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Last year, Apple made over 270
billion dollars in revenues.
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45% of those revenues were generated in
North and South America, 25% in Europe,
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15% in China and 15% in the rest of Asia-Pacific.
The iPhone is Apple’s most valuable product.
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Since 2008, it has been the
company’s main source of revenue.
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And although Apple has diversified its
product line with the iPad, Apple watch,
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AirPods and services, the iPhone is still
responsible for around 50% of Apple’s revenues.
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Apple makes another 9% of their revenues from the
iPad, 10% from the Mac, 11% from wearables like
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the Apple watch or AirPods and 21% from services.
Apple is currently the most valuable company in
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the world with a market cap of
2.4 trillion dollars - leaving
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Microsoft and Alphabet behind them.
The company currently has a PE ratio
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of 28 and a dividend yield of 0.6%.
Buffett, who avoided investing in tech
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stocks for a long time, first bought 10
million shares of Apple back in May 2016.
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So he already made more than 500%
plus on that initial investment.
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Over time, he kept investing into the stock.
And as of 2021, he already made
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100 billion dollars on his Apple investment.
Apple has been a great investment for Berkshire:
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It’s an absolute cash machine with a wide
moat and long-term consistent earnings growth.
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In position number 2, we have Bank of America.
It makes up 14.2% of Berkshire’s total portfolio.
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Bank of America is one of
the largest banks in the US.
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Last year, they made
over 85 billion dollars in revenues.
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88% of those revenues were generated in the US,
5% in Europe and the Middle East and 5% in Asia.
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Bank of America makes 37% of their
revenues from Consumer Banking,
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21% from Global Wealth and Investment
Management, 21% from Global Banking and 21%
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from Global Markets.
It currently has a
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market cap of 337 billion dollars, a low PE
ratio of 13 and a dividend yield of 2.1%.
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Buffett loves banking stocks in general, but Bank
of America is by far his favorite stock.
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Buffett values a good management team -
and he is a big fan of the Bank of America's
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CEO, Brian Moynihan.
He transformed the bank after the 2008 Global
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Financial Crises - making it more diversified
and investing into the bank's technology.
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And on top of that, they have
a healthy dividend yield.
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In position number 3, we have American Express.
It makes up 8.6% of Berkshire’s total portfolio.
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American Express is the third largest credit
card company in the US based on purchase volume
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right behind Visa and Mastercard.
The company earns revenue from 2 main sources:
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Cardholders and Merchant Partners.
Within Cardholder revenues,
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American Express earns money from interest
on outstanding balances and membership fees.
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But the company earns most of its
money through discount revenue,
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so through earnings on transactions
that are done with partner merchants.
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Last year, American Express made
over 36 billion dollars in revenues.
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77% of those revenues were generated in the US, 8%
in Europe and the Middle East, 9% in Asia-Pacific
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and 5% in Latin America and Canada.
It currently has a market cap of
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133 billion dollars, a PE ratio of
19 and a dividend yield of 1.0%.
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Buffett actually started investing
into American Express in 1962.
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The company has a strong branding, a competitive
advantage and capable management team.
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In position number 4 we have Coca Cola which
makes up 7.4% of Berkshire's total portfolio.
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Coca Cola is the largest non-alcoholic
beverage company globally.
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It owns brands like Coke, Fanta, and Sprite,
Innocent, Costa Coffee, Fuze Tea, POWERADE,
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Schweppes and many many more.
Last year, Coca Cola made
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33 billion dollars in revenues.
34% of those revenues were generated
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in the US and 66% outside the US.
They currently have a market cap
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of 233 billion dollars, a PE ratio
of 28 and a dividend yield of 3.1%.
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Coca Cola is a more
conservative and defensive play.
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A stock that went through previous
recessions relatively fine.
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It has a strong dividend yield of over 3%
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and sells products that
consumers will probably always want.
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In position number 5, we have Kraft Heinz.
It makes up 4.5% of Berkshire’s total portfolio.
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Kraft Heinz is one of the largest
food and beverage producers globally.
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It’s a US company that was formed after the
merger of Kraft Foods and Heinz in 2015.
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It owns brands like Kraft, Heinz Ketchup,
Oscar Mayer, Capri Sun, Philadelphia,
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Lunchables and many many more.
Last year, Kraft Heinz made
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over 26 billion dollars in revenues.
74% of those revenues were generated in the US,
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6% in Canada and 20% outside North America.
It currently has a market cap of
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44 billion dollars, a PE ratio of
20 and a dividend yield of 4.4%.
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Kraft Heinz is a classic Buffett stock
where a company has a strong consumer brand.
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But it came under huge pressure in the last
few years, bringing down the stock price by
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almost 80% from its highs in 2017.
One of the reasons is that consumer
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preferences have shifted towards natural foods,
away from packaged food that Kraft Heinz offers.
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Buffett openly admitted that he “made a mistake in the
Kraft purchase in terms of paying too much.”
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In position number 6, we have Moody’s.
It makes up 3% of Berkshire’s total portfolio.
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Moody’s is one of the leading
credit rating agencies.
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It’s part of the so-called Big Three credit
rating agencies together with S&P and Fitch.
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Moody’s operates in 2 segments:
Number 1 is Investor Services which
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provides investors with credit ratings
and research for stocks and bonds.
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Number 2 is Analytics which develops
risk management, credit analysis,
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and economic research software.
Last year, the company made
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over 5 billion dollars in revenues.
55% of those revenues were generated
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in the US and 45% outside the US.
Moody’s makes 61% of their revenues from
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Investor Services and 39% from Analytics.
It currently has a market cap of
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68 billion dollars, a PE ratio of
33 and a dividend yield of 0.6%.
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Buffett has been invested in
the company for 20 years now.
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Moody's stands for two things
that Buffett looks for in his
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stocks - market leadership and a wide moat.
Moody's is one of only three major credit
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rating agencies, next to S&P and Fitch.
Amongst those three, Moody’s and S&P control
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over 80% of the international market share.
And on top of all that, Moody’s is an absolute cash
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machine with an operating margin close to 50%.
From number 7 to 15, the holdings are becoming
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smaller and smaller, but there are
still some noteworthy investments here.
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That’s why we will quickly go through them.
In position number 7 you have
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telecommunications company Verizon with 3.0%.
Number 8 is another bank, Bancorp, with 2.5%.
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At Number 9 you will find
healthcare provider Davita which
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focuses on kidney dialysis services with 1.5%.
In position number 10 you have telecommunications
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company Charter Communications with 1.3%.
Number 11 is yet another bank,
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BNY Mellon, with 1.3%.
By this time, you should already
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notice how much Buffett loves banking stocks.
Number 12 is car builder General Motors with 1.2%.
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At number 13 you will find internet infrastructure
provider Verisign with 1.0%.
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Number 14 is the second largest
oil producer Chevron with 0.8%.
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And last but not least the US retailer
Kroger on position number 15 with 0.8%
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The top 15 alone make up over 92% of
Berkshire’s total stock market portfolio.
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So we’re not gonna go through every single
investment of Berkshire in this video because
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they have a total of 44 holdings.
The rest of the portfolio is filled with
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smaller positions in companies that make up less
than 1% each of Berkshire’s total portfolio.
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The 29 remaining companies that
we haven’t looked at in this video
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only make up 7% of Berkshire’s total stock market portfolio.
On top of the public stocks that Berkshire holds,
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they also have a large list of non-public
operating subsidiaries that are not
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traded on the stock exchange.
Berkshire owns 100% of almost
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all the companies that you see here.
These non-public investments are mainly
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in the insurance, railroad,
energy and manufacturing business.
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In that list, you can find big names
like the car insurance company GEICO.
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GEICO alone generated revenues
of 61 billion dollars in 2020.
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Another one is railroad company
Burlington Northern Santa Fe
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with a revenue of 23 billion dollars.
In total Berkshire’s operating subsidiaries
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brought in total revenues of
254 billion dollars and net
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earnings of over 23 billion dollars in 2020.
What you can see in this portfolio breakdown
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is how diversified Berkshire is invested.
You have publicly-traded and private
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companies from multiple industries.
But it is incredibly concentrated in
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US stocks and has a high concentration risk on
one single company only - which is Apple with over 40%.
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Also, for my taste, there are far
too many banking stocks included.
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But what do you actually think
about Berkshire’s portfolio?
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Are you already invested in the stock?
What are the reasons for not investing in it?
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What would you do differently?
As always - let me know in the
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comment section below.
I hope that this
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video could bring some value to you.
If you liked what you saw and you want to support
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this channel, then please make sure you subscribe.
Thank you very much for doing that - and peace!
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