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Sydnee Gatewood
Sydnee Gatewood
Articles (3380) 

Warren Buffett's Top 5 Holdings Post Mixed Performances in 2020

While Apple soared in spite of the Covid-19 pandemic, other top stocks failed to impress

With the final day of an interesting and memorable year upon us, investors are looking at their portfolios to determine how they performed in 2020.

With the Covid-19 pandemic creating uncertainty around the world, it is unsurprising that many may have seen their top stocks underperform the benchmark indexes. Investing legend Warren Buffett (Trades, Portfolio) is no exception. While Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) has managed to find value in this volatile environment with the recent purchases of Snowflake Inc. (NYSE:SNOW), T-Mobile US Inc. (NASDAQ:TMUS) and pharmaceutical giants like AbbVie Inc. (NYSE:ABBV), Merck & Co. Inc. (NYSE:MRK) and several other companies, some of its largest holdings have still underperformed the S&P 500 Index year to date.

The guru's $228.9 billion equity portfolio consisted of 49 stocks as of Sept. 30. A majority of the portfolio was invested in technology stocks at 49.93%, while the financial services sector has a weight of 27.10% and the consumer defensive space represents 13.29%.

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As of the end of the third quarter, Buffett's five largest holdings, accounting for over half of the equity portfolio, were Apple Inc. (NASDAQ:AAPL), Bank of America Corp. (NYSE:BAC), Coca-Cola Co. (NYSE:KO), American Express Co. (NYSE:AXP) and The Kraft Heinz Co. (NASDAQ:KHC).

Apple

Representing 47.78% of the equity portfolio, Apple is Buffett's largest holding. GuruFocus estimates he has gained 258.04% on the investment since the first quarter of 2016.

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With a return of 83.25%, the Cupertino, California-based company outperformed the S&P 500 Index by 67.65% in 2020.

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The well-known electronics manufacturer, whose products include the iPhone, Mac and iPad, has a $2.27 trillion market cap; its shares were trading around $134.36 on Thursday with a price-earnings ratio of 41.02, a price-book ratio of 34.74 and a price-sales ratio of 8.55.

While Apple has recorded a decline in iPhone sales in recent years, the company recorded increased demand for its Mac computers, wearable devices and various services in its fourth fiscal quarter as more people worked or attended school from home. It posted earnings of 73 cents per share on $64.7 billion in revenue.

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With a 5.55% stake, Buffett is by far Apple's largest guru shareholder. Other top guru investors include Ken Fisher (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Bill Gates (Trades, Portfolio)' foundation trust, David Carlson (Trades, Portfolio) and Tom Gayner (Trades, Portfolio).

Bank of America

Accounting for 10.63% of the equity portfolio, Bank of America is the Oracle of Omaha's second-largest holding. GuruFocus says he has gained approximately 16.57% on the investment since the third quarter of 2017.

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With a return of -12.83%, the bank, which is headquartered in Charlotte, North Carolina, underperformed the S&P 500 Index by 28.43% this year.

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The bank has a market cap of $259.13 billion; its shares were trading around $29.96 on Thursday with a price-earnings ratio of 14.83, a price-book ratio of 1.06 and a price-sales ratio of 3.03.

Impacted by the low interest rates implemented by the Federal Reserve earlier this year to combat impacts from the Covid-19 virus, Bank of America recorded lower earnings and revenue for the third quarter. The bank posted earnings of 51 cents per share on $20.45 billion in revenue, which were both down from the prior-year quarter. It also saw its net interest income fall 17% to $10.2 billion. The net interest margin of 1.72% also missed analysts' expectations of 1.82%.

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Holding 11.68% of Bank of America's outstanding shares, Buffett is by far its largest guru shareholder. Dodge & Cox, Primecap, Pioneer, Hotchkis & Wiley, Bill Nygren (Trades, Portfolio), Li Lu (Trades, Portfolio) and Richard Pzena (Trades, Portfolio) also have significant positions in the stock.

Coca-Cola

With a weight of 8.63%, Coca-Cola is the third-largest position in Buffett's equity portfolio. GuruFocus data shows he has gained approximately 155.4% on the long-held investment.

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With a year-to-date return of 1.32%, the Atlanta-based manufacturer of popular soft drinks underperformed the S&P 500 Index by 14.28%.

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The well-known beverage company, whose products include Coke, Sprite, Fanta, Powerade, Fairlife and Dasani, has a $234.64 billion market cap; its shares were trading around $54.41 on Thursday with a price-earnings ratio of 28.44, a price-book ratio of 12.61 and a price-sales ratio of 7.05.

As a result of restaurants, bars, movie theaters and stadiums around the world shutting their doors amid the lockdown measures, Coca-Cola's third-quarter results were negatively impacted. Adjusted earnings of 55 cents per share were down 2% from the prior-year quarter, while revenue declined 9% to $8.65 billion.

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Buffett is Coca-Cola's largest guru shareholder with a 9.31% stake. Other top guru investors include Jeremy Grantham (Trades, Portfolio), Pioneer, Yacktman Asset Management (Trades, Portfolio), Ray Dalio (Trades, Portfolio)'s Bridgewater Associates, the T Rowe Price Equity Income Fund (Trades, Portfolio), Steven Cohen (Trades, Portfolio) and the MS Global Franchise Fund (Trades, Portfolio).

American Express

With 6.64% space in the equity portfolio, American Express is the guru's fourth-largest stake. GuruFocus data says Buffett has gained an estimated 686.6% on the investment.

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With a return of -2.68%, the financial services company, which is headquartered in New York, underperformed the S&P 500 Index by 18.28% in 2020.

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The credit card company has a market cap of $96.9 billion; its shares were trading around $120.34 on Thursday with a price-earnings ratio of 29.87, a price-book ratio of 4.44 and a price-sales ratio of 3.47.

In October, American Express reported earnings of $1.30 per share on $8.8 billion in revenue, which were both down from the prior-year quarter as consumers curbed their spending on big items and travel in the wake of the pandemic.

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With an 18.83% stake, Buffett is also American Express' top guru shareholder. Dodge & Cox, Fisher, Andreas Halvorsen (Trades, Portfolio), Chris Davis (Trades, Portfolio) and First Eagle Investment (Trades, Portfolio), among others, also have large exposures to the stock.

Kraft Heinz

Coming in at number five, Kraft Heinz represents 4.26% of Buffett's equity portfolio. According to GuruFocus, he has lost an estimated 53.93% on the investment.

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Returning 12.89% for the year, the Chicago-based packaged foods company underperformed the S&P 500 Index by 2.71%.

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The company, which is known for Heinz ketchup and Kraft mac and cheese, has a $41.9 billion market cap; its shares were trading around $34.26 on Thursday with a price-earnings ratio of 13.98, a price-book ratio of 0.86 and a price-sales ratio of 1.64.

Benefitting from more consumers remaining at home during the coronavirus lockdowns, Kraft Heinz saw its third-quarter revenue grow 6% from a year ago to $6.4 billion while adjusted earnings per share increased 1.4% to 70 cents.

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As with all his other top holdings, Buffett is Kraft Heinz's largest guru shareholder with a 26.63% stake. First Eagle, Pioneer, Jim Simons (Trades, Portfolio)' Renaissance Technologies, Dalio, Joel Greenblatt (Trades, Portfolio), Bruce Berkowitz (Trades, Portfolio), Mark Hillman (Trades, Portfolio) and several other gurus also own the stock.

Disclosure: No positions.

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