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Eric Schleien
Eric Schleien

Warren Buffett's Top 5 Holdings: The Coca-Cola Company, Wells Fargo & Company, American Express Company, The Procter & Gamble Company, Kraft Foods Inc.

Warren Buffett\'s Top 5 Holdings

June 09, 2010 | About:
Warren Buffett is the most respected and successful investor in history. Buffett has been called "The Oracle of Omaha" for his impressive investing prowess. As of September 2007, he was the third richest person in the world. Buffett studied under the legendary Benjamin Graham at Columbia University. Graham had a major impact on Buffett's life and investment strategies. Buffett is Chairman of the holding company Berkshire Hathaway (BRK-A), which he built from a textile company into a major corporation with a market cap just shy of $200 billion. Today, under Buffett's leadership, Berkshire shares averaged a 21.4% compounded annual gain in per-share book value from 1965-2006. In 2010, Berkshire was ranked #3 most admired company by Fortune Magazine.

Warren Buffett follows a value investing strategy that is an adaptation of Benjamin Graham's approach. His investment strategy of discipline, patience and value consistently outperforms the market and his moves are followed by thousands of investors worldwide. Buffett seeks to acquire great companies trading at a discount to their intrinsic value, and to hold them for a long time. He will only invest in businesses that he understands, and always insists on having a "margin of safety" allowing room for error in investment decisions. Regarding the types of businesses Berkshire likes to purchase, Buffett stated, "We want businesses to be one (a) that we can understand; (b) with favorable long-term prospects; (c) operated by honest and competent people; and (d) available at a very attractive price."

Buffett alongside Berkshire Vice-Chairman, Charlie Munger, hosts the Berkshire Hathaway (BRK-A) shareholders meeting every year which has been deemed the "Woodstock for Capitalists". It's also the largest event in Omaha, NE with the 2010 bringing roughly 40,000 people out to Omaha.

At this year's event, Buffett defended Goldman Sachs (GS), went into detail about the purchase of BYD (BYDDF.PK), and spoke about the past year's activity at Berkshire. You can read a transcript of the Annual Meeting here: http://climateerinvest.blogspot.com/2010/05/better-than-as-close-to-transcript-of.html

Most recently, he testified at a hearing to speak about the credit rating agencies where he discussed Moody's as well as signaled warnings about Municipal debt.

You can read more about it here: http://dealbook.blogs.nytimes.com/2010/06/02/buffett-warns-of-possible-call-for-muni-bailouts/

During the hearing Buffett predicted there will be a crisis that comes due to all the debt many state and local governments have taken on. “I don’t think Moody’s (MCO)or Standard & Poor’s or I could come up with anything terribly insightful about the state and municipal finances five or 10 years from now, except for the fact that there will be a terrible problem.”

While Buffett did make this prediction during the hearing, he is known for shying away from predicting short term trends such as where the stock market is going or where interest rates will be next week. However, Buffett does believe the worst is behind us and that we face inflationary threats in the future.

The top 5 holdings of Warren Buffett are:

No. 1: The Coca-Cola Company (NYSE:KO)

The Coca-Cola Company (NYSE:KO) is the world's largest beverage company and is the producer and marketer of soft drinks. The Coca-Cola Company (NYSE:KO) has a market cap of $117.2 billion; its shares were traded at around $50.8 with a P/E ratio of 15.9 and P/S ratio of 3.8. The dividend yield of The Coca-Cola Company (NYSE:KO) stock is 3.5%. The Coca-Cola Company had an annual average earning growth rate of 8.9% over the past 10 years. GuruFocus rated The Coca-Cola Company the business predictability rank of 3.5-star.

During the 2010 Berkshire Hathaway (BRK-A) meeting, Buffett mentioned Coca-Cola (NYSE:KO) as a high return on invested capital business in which he said, "It is smart to bet on companies that can get large while needing little capital..."

On June 7, 2010 it was announced that The Coca-Cola Company (NYSE:KO) paid $715 million for the rights to distribute the product of its competitor Dr. Pepper Snapple Group (DPS). This was made possible due to Coca-Cola's announcement in February to buy Coca-Cola Enterprises (CCE), a distributor of Dr. Pepper Snapple Group (DPS) brands such as Canada Dry and Dr. Pepper in the United States. The $715 million dollar deal has a term of 20 years with 20-year renewal periods.

Warren Buffett currently owns 200,000,000 shares of Coca-Cola (NYSE:KO) making this a 21.6% weighting in his portfolio.

No. 2: Wells Fargo & Company (NYSE:WFC)

Wells Fargo & Company (NYSE:WFC) is a diversified financial services company providing banking, insurance, investments, mortgage and consumer finance services through stores, its Internet site and other distribution channels across North America as well as internationally. Wells Fargo & Company (NYSE:WFC) has a market cap of $142.19 billion; its shares were traded at around $27.29 with a P/E ratio of 15.7 and P/S ratio of 1.4. The dividend yield of Wells Fargo & Company (NYSE:WFC) is 0.7%. Wells Fargo & Company (NYSE:WFC) had an annual average earnings growth rate of 5.1% over the past 10 years.

Wells Fargo & Company (NYSE:WFC) has consistently been touted by Warren Buffett as one of the best run banks in the United States. Both Warren Buffett & Berkshire Vice-Chairman of Berkshire Hathaway (BRK-A) have both called Wells Fargo & Company (NYSE:WFC) a good investment at today's prices even after the run up from its lows in the $8 range when Buffett said he would have been comfortable putting all of his money in Wells Fargo at those prices.

On June 7, 2010 it was announced that two business units of Wells Fargo & Company (NYSE:WFC) agreed to sign a deal with the American Medical Association (AMA) to become the preferred providers of medical practice and equipment financing for the physician members.

Warren Buffett currently owns 320,088,385 shares of Wells Fargo & Company (NYSE:WFC) making this a 19.56% weighting in his portfolio.

No. 3: American Express Company (NYSE:AXP)

American Express Company (NYSE:AXP) is primarily engaged in the business of providing travel related services, financial advisory services and international banking services throughout the world. American Express Company (NYSE:AXP) has a market cap of $45.3 billion; its shares were traded at around $37.71 with a P/E ratio of 20.4 and P/S ratio of 1.8. The dividend yield of American Express Company (NYSE:AXP) is 1.9%.

On June 2, 2010 American Express Company (NYSE:AXP) reported double-digit percentage gains in spending on its credit cards in March, April, and during the first 20 days of May compared with the same periods from a year prior. Chairman and CEO Kenneth Chenault said worldwide billed business grew 20% in March, 19% in April, and 14% during the first 20 days of May.

Warren Buffett currently owns 151,610,700 shares of American Express Company (NYSE:AXP) making this a 12.28% weighting in his portfolio.

No. 4: The Procter & Gamble Company (NYSE:PG)

The Procter & Gamble Company (NYSE:PG) manufactures and markets a broad range of consumer products in many countries throughout the world. The Procter & Gamble Company has a market cap of $174.58 billion; its shares were traded at around $60.62 with a P/E ratio of 16.1 and P/S ratio of 2.2. The dividend yield of The Procter & Gamble Company stocks is 3.2%. The Procter & Gamble Company (NYSE:PG) had an annual average earning growth rate of 12.9% over the past 10 years. GuruFocus rated The Procter & Gamble Company the business predictability rank of 5-star.

Warren Buffett owns shares of The Procter & Gamble Company (NYSE:PG) through a merger with Gillette. It is a common "defensive stock" which many analysts deem as recession proof with constant demand for their business as well as strong pricing power in inflationary environments.

On Thursday May 27, 2010 it was announced that The Proctor & Gamble Company (NYSE:PG) had agreed to sell its Bibsters disposable bib line to Hamco, a subsidiary of Crown Crafts Inc. (CRWS).

Warren Buffett currently owns 79,096,784 shares of The Proctor & Gamble Company (NYSE:PG) making this a 9.83% weighting in his portfolio.

No. 5: Kraft Foods Inc. (KFT)

Kraft Foods (KFT), Inc. is the largest branded food and beverage company headquartered in the United States. Kraft Foods Inc. (KFT) has a market cap of $41.9 billion; its shares were traded at around $28.32 with a P/E ratio of 13.7 and P/S ratio of 1. The dividend yield of Kraft Foods Inc. (KFT) is 4.1%.

Warren Buffett criticized Kraft Foods Inc. (KFT) for selling its frozen pizza business as well as the deal with Cadbury at the 2010 Berkshire Hathaway (BRK-A) Annual Meeting saying "both deals were dumb". Buffett explained that he thought Kraft Foods Inc. (KFT) paid too much for Cadbury and sold their frozen pizza business for too cheap. Since the acquisition of Cadbury, it has been reported as of May 27, 2010 that five senior executives from Cadbury were quitting the combined corporation.

Warren Buffett currently owns 106,734,745 shares of Kraft Foods Inc. (KFT) making this a 6.34% weighting in his portfolio.

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About the author:

Eric Schleien
You can read more by Eric Schleien by visiting his website www.ValueSeeker.net

Rating: 2.8/5 (25 votes)



Ricmoh - 8 years ago    Report SPAM
This article should be rewritten because in looking just at Buffett's stock holdings it ignores Buffett's wholly owned businesses, which are his larger holdings for the most part. This problem also means the author's stated portfolio percentages are misleading, e.g. Berkshire's investment in Coke is nowhere near 21.6% of its total investments.
Cm1750 - 8 years ago    Report SPAM
Another problem is that WEB has owned many of these stocks for decades, usually bought at much lower valuations.

Recent new buys (RSG, BDX etc.), and the prices he acquired them at, is more relevant for analysis IMO.
Todrickgivenson - 11 months ago    Report SPAM

I have not read up on Warren Buffet but I think the information Eric Schleien presented seems adequate for the topic the article is address.

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