Other than investing directly in Berkshire Hathaway (BRK.A, Financial) stock, some entrepreneurial investors would rather invest directly on what Berkshire is buying in hopes of better returns.
There is no doubt following Berkshire Hathaway 13F filings can lead to great returns for a heavily stock-oriented portfolio.
One very good recent example is Berkshire’s investment in Apple (AAPL, Financial).
Back in the first quarter of 2016, Berkshire’s initial stake in Apple was valued at $1 billion at an estimated price per share of $108.99. After almost consistently adding to its investment on a quarterly basis along with the price appreciation of the iPhone company, Berkshire ended up with a $43.5 billion stake to date.
Blindly following Berkshire’s investment, and buying Apple shares in the within the first half of 2016, would yield already a 73% return to date, not taking dividend payouts into account, handily beating S&P 500’s total return of 10.3% in the past three years.
Meanwhile, buying into Synchrony Financial (SYF, Financial) would have provided a 28% loss and IBM (IBM) would have provided a 14% loss, not taking into account dividend payments.
To date, Synchrony Financial has just lost a key customer, Walmart (WMT, Financial), while IBM has been suffering a decline in overall business performance.
These two poorly performing stocks were just part of Berkshire’s current 46-count stock investments. The Oracle of Omaha has earlier warned investors not to try to mimic his success and rather focus on investing in oneself.
Meanwhile, there may also be a good reason to believe that recent Berkshire Hathaway investments were guided by Buffett’s lieutenants rather than the Oracle himself.
As of recent 13F filing disclosures, Berkshire Hathaway initiated investments in Travelers Companies (TRV, Financial) for $460 million, PNC Financial (PNC, Financial) for $829 million, Oracle (ORCL, Financial) for $2.1 billion and JPMorgan (JPM, Financial) for $4 billion.
Nonetheless, these recent investments represent just little less than 4% of the company’s $200 billion stock investments. Not to completely ignore, Berkshire also just invested nearly $1 billion in its own stock.
Also, Berkshire still had an extra $104 billion in cash to invest at the end of September, indicating that the mammoth buying power can mitigate any stock performance risk the company takes.
Disclosure: Long BRK.B, AAPL, SYF, WMT, JPM.
