GuruFocus is dedicated to studying what beset investors are buying and thinking. It is interesting to research how we do if we had bought the stocks of the Gurus back years ago. This is our study with Warren Buffett’s portfolio of 2000.
Back in June 2000, Warren Buffett’s stock portfolio was worth $28 billion, it has 19 stocks, with 67% concentrated on Coca Cola (KO) and American Express (AXP). For comparison, his current portfolio has 40 stocks valued at $68 billion. Back in 2000, The Gillette Co. was his third largest holding, it was acquired by Procter & Gamble Company (PG) in 2005. Wesco Financial Corp. (WSC) was his long term holding, run by his partner Charlie Munger. Dun & Bradstreet Corp. span off Moody’s later, and Berkshire became the largest shareholder of the credit rating company. It is interesting to point out that Citigroup was in the portfolio of Berkshire also.
This table is his portfolio as of June 30, 2000 .
Symbol |
Name |
Value |
Shares |
Percentage |
KO |
Coca Cola |
11487500 |
200000000 |
40.4% |
AXP |
American Express Co. |
7902708 |
151610700 |
27.8% |
PG |
The Gillette Co. |
3354000 |
96000000 |
11.8% |
WSC |
Wesco Finl Corp. |
1169133 |
5703087 |
4.1% |
WPO |
Washington Post Co. |
825872 |
1727765 |
2.9% |
DNB |
Dun & Bradstreet Corp. |
687000 |
24000000 |
2.4% |
FDC |
First Data Corporation |
481064 |
9694000 |
1.7% |
JNY |
Jones Apparel Group Inc. |
370125 |
15750000 |
1.3% |
SJR |
Shaw Communications Inc. |
340401 |
13788100 |
1.2% |
STI |
Sun Trusts Banks Inc. |
303429 |
6641400 |
1.1% |
NKE |
Nike Inc. |
256420 |
6440600 |
0.9% |
C |
Citigroup |
254638 |
4226345 |
0.9% |
GMT |
GATX Corp. |
249584 |
7340700 |
0.9% |
G |
Great Lakes Chemical Corp |
220500 |
7000000 |
0.8% |
GCI |
Gannett Inc. |
217526 |
3636800 |
0.8% |
LIZ |
Liz Claiborne Inc. |
172531 |
4894500 |
0.6% |
CB |
Chubb Corp. |
129753 |
2109800 |
0.5% |
EIX |
Edison International |
18880 |
921000 |
0.1% |
ZNT |
Zenith National Ins. Corp |
17354 |
816655 |
0.1% |
In this study, we assume that we invest in the top 5 stocks of Warren Buffett’s portfolio on June 30, 2000 in equal weight. The portfolio was started on Aug. 15, 2000, when Berkshire’s portfolio was released. The acquisition of The Gillette Co. by Procter & Gamble was adjusted. Dividends are not considered in this study. This table shows the results:
Date |
Portfolio |
S&P500 |
||
Annual Return |
Cumulative Return |
Annual Return |
Cumulative Return |
|
2H 2000 |
11.6% |
11.2% |
-11.5% |
-11.5% |
Year 2001 |
-12.5% |
-1.2% |
-11.2% |
-21.4% |
Year 2002 |
4.0% |
3.4% |
-22.5% |
-39.1% |
Year 2003 |
16.9% |
18.4% |
22.0% |
-25.7% |
Year 2004 |
12.0% |
35.1% |
9.3% |
-18.8% |
Year 2005 |
-1.4% |
30.5% |
3.0% |
-16.3% |
Year 2006 |
13.1% |
46.3% |
13.6% |
-4.9% |
Year 2007 |
1.3% |
44.7% |
3.5% |
-1.6% |
Q1 2008 |
-4.8% |
38.8% |
-9.9% |
-11.3% |
We can see that over the past 7 years and three quarters the portfolio gained a cumulative return of 38.8%, while the S&P500 lost 11.3%. That is an outperformance of 50%! On annual basis the portfolio actually underperformed the index in 5 years out of this peroid, the overall outformance is achieved by avoiding the big losses in year 2000 and 2002. No wonder why Warren Buffett told us his rule number one: “Never lose money!”
The portfolio of 5 stocks also shows a smaller volatility than the 500 stocks of S&P. For 2008, it is down 4.8% during the first quarter, while S&P500 is down 9.9%.
In the coming months GuruFocus will focus more on backtesting Gurus’ portfolios, and try to find out the winning strategies in following Gurus. Before that, simply buying Warren Buffett’s top holdings can be a long term winning strategy, as shown in this study. Today his top holdings are Coca Cola (KO), Wells Fargo (WFC), American Express (AXP), Procter & Gamble (PG), and his latest favorite Burlington Northern (BNI). See his complete portfolio here: http://www.gurufocus.com/holdings.php?GuruName=Warren+Buffett&sort=position
Sometimes beating the market is easy, that is, if you follow Warren Buffett.
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User Comments:
I disagree with your point of buying his top holdings. He's held them so long he's collection double digit dividends. You and I wont get a 16% yield on KO, or PG. A better strategy would be to focus on his recent additons: BNI, GSK, USB, JNJ and Korean stocks etc. Remember he's also mostly limited to large cap purchases due to size of Berk.
I think it's interesting to look at what his purchases of used car KMX, pre-fab homes Clayton Homes, railroads and more foreign currency tell us about where he see's the economy going.
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