Buffet Dismantsles Portfolio Worth $133 Billion in 2024, Excluding These Two Stocks He Holds On To
In the first half of 2024, famed investor Warren Buffett made significant moves in his portfolio, selling a staggering $133 billion worth of shares from Berkshire Hathaway. This included reducing Berkshire's substantial stake in Apple and nearly a quarter of its Bank of America holdings.
As of the third quarter, Apple, American Express, Bank of America, and Coca-Cola collectively accounted for 70% of Berkshire's stock portfolio, totaling $271 billion. Buffett's decision to dump cash while the S&P 500 trades at a high 30 times earnings could signal concern about stock market valuations.
However, it's noteworthy that Buffett continues to hold stocks like Coca-Cola and American Express, indicating his belief in their growth potential.
1. Coca-Cola
Buffett's love for Coca-Cola dates back to 1988, when he invested a fifth of Berkshire's equity in the soft drink giant following its sharp drop during the 1987 Black Monday crash. Since then, Buffett has never sold a single share, which currently amounts to 400 million shares worth $25 billion. With a $2.5 billion annual dividend, Coca-Cola is a reliable source of passive income.
While Coca-Cola may not be the high-growth company it once was, the iconic brand and stable market position contribute to its long-term earnings growth. Despite a slight decline in unit case volume, Coca-Cola is still expected to outperform the global beverage industry's historical growth rate of 4%.
Coca-Cola's shares are trading at 21 times 2025 earnings estimates, with a high dividend yield of 3.14%. Although market performance might not surpass the S&P 500, Coca-Cola's strong brand and consistent sales make it an attractive option for income boosters.
2. American Express
Berkshire first invested in American Express in 1998 and has held onto it earnestly since. As of the third quarter, Berkshire still maintains a large stake in American Express with 151 million shares. American Express's growth over the years, from $12.5 million in 1964 to $9.9 billion in 2024, reflects the strong competitive moat it has built around its customer service and card membership model.
Despite a recent dip in consumer spending, American Express managed to grow its net card fees by 18% and its total transaction volumes by 6%. The stock's 20 times 2025 earnings estimates might seem high compared to its average 18-year price-to-earnings multiple, but analysts expect earnings to grow by 14% in the long term.
Buffett's unwavering commitment to American Express suggests his belief in its ability to maintain its financial strength and growth, even during recessions.
These two timeless investments embody Buffett's long-term value investing strategy and his affinity for stocks with sustainable competitive advantages and reliable income streams.
- Buffett's Portfolio and Finance: Buffett's decision to reduce Berkshire's stake in Apple and Bank of America, coupled with selling a large amount of shares, has likely released a significant amount of cash into his portfolio. This move, in the context of a high S&P 500 valuation, might be interpreted as a strategy to deploy this outstanding cash in more attractive investment opportunities.
- Stocks as a Barometer: Buffett's decision to sell shares while holding onto stocks like Coca-Cola and American Express could also be seen as a barometer of his sentiment towards the overall stock market. His decision to hold onto financially sound companies like these may suggest that he sees potential in the broader stock market, even if he is wary of certain individual stocks. Furthermore, the persistent delinquency rates in certain sectors could potentially lead to further selling opportunities or an overall reduction in risk exposure in his portfolio.
