Christmas may be months away, but Warren Buffett (Trades, Portfolio) stocks are trading near their 52-week lows this week, and not only the troubled Kraft Heinz Co. (KHC, Financial).
Four stocks in the guru’s Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial) portfolio have dived as some face trouble in their businesses and as the bull market loses momentum. The S&P 500 index has declined about 5% since its 2019 peak in late July, reducing the year-to-date return to 15.12% from 20.72%.
Buffett has been silent lately on the events causing turbulence in the market, such as the inverted yield curve, chaotic presidential tweets and a protracted tariff war. But the investor, whom many regard as one of the greatest of all time, has allowed his company’s cash stockpile to balloon to $122 billion, possibly in preparation to buy cheap stocks should the market correct. He also slowed his buying in the second quarter, adding to only four positions.
Regarding price, Buffett seeks a margin of safety between a company’s stock price and its intrinsic value, and some of his highly lucrative deals of recent years have occurred when otherwise strong companies fell into financial difficulty, allowing him to nab shares at favorable terms and prices. But he also advocates buying “wonderful” companies at “fair” prices instead of fair companies at wonderful prices.
Buffett tends to favor companies that he understands, that have strong moats and that he considers “high quality.” His portfolio listed 47 stocks at the end of the second quarter, valued in aggregate at $208.1 billion. Most of the holdings have gained this year, with only three of the top 20 declining.
As of Tuesday, the four Buffett stocks that have collapsed to near their lowest prices in a year were: The Kraft Heinz Co. (KHC, Financial), Bank of New York Mellon Corp. (BK, Financial), American Airlines Group Inc. (AAL, Financial) and Wells Fargo & Co. (WFC, Financial).
The Kraft Heinz Co. (KHC, Financial)
Shares of The Kraft Heinz Co. tumbled 57% over the past year. After falling 2.27% Tuesday, they closed at $25 for the day. Buffett owns 325,634,818 shares of the company, reflecting 4.86% of his portfolio.
The Kraft Heinz Co. has a market cap of $30.5 billion; its shares were traded with and price-sales ratio of 1.20. The trailing 12-month dividend yield of The Kraft Heinz Co. is 7.30%. The forward dividend yield of The Kraft Heinz Co. is 6.25%.
Bank of New York Mellon Corp. (BK, Financial)
Bank of New York Mellon Corp. stock fell to 23% over the past year. Down 0.39% Tuesday, it closed at $40.95 per share. GuruFocus estimates Buffett’s buy price around $41 per share, placing him near even on the investment with an approximate 3.3% loss based on quarterly average prices.
Bank of New York Mellon Corp has a market cap of $38.6 billion; its shares were traded with a price-earnings ratio of 10.63 and price-sales ratio of 2.58. The trailing 12-month dividend yield of Bank of New York Mellon Corp. is 2.81%. The forward dividend yield of Bank of New York Mellon Corp. is 3.02%.
American Airlines Group Inc. (AAL, Financial)
American Airlines Group Inc. shares declined 40% over the past year. Down 2.94% Tuesday, they closed at $24.45 per share. GuruFocus estimates Buffett’s buy price around $40.05 per share, making them roughly 32.99% lower than what he paid. Buffett holds 43.7 million shares of the company, worth 0.68% of the portfolio.
American Airlines Group Inc. has a market cap of $10.89 billion; its shares were traded with a price-earnings ratio of 7.35 and price-sales ratio of 0.25. The trailing 12-month dividend yield of American Airlines Group Inc. is 1.63%. The forward dividend yield of American Airlines Group Inc. is 1.59%.
Wells Fargo & Co. (WFC, Financial)
Wells Fargo & Co. declined 24% over the past year. After edging down 0.53% Tuesday, it closed for the day at $44.75 per share. A longstanding position in Buffett’s portfolio, Wells Fargo represented 9.32% at quarter-end, at 409.8 million shares.
Wells Fargo & Co. has a market cap of $197.17 billion; its shares were traded with a price-earnings ratio of 9.23 and price-sales ratio of 2.39. The trailing 12-month dividend yield of Wells Fargo & Co. is 4.10%. The forward dividend yield of Wells Fargo & Co. is 4.54%.
See Warren Buffett (Trades, Portfolio)’s portfolio here.
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