In fact, if you want to invest in companies the billionaire himself finds attractive — companies that are easy to understand, have predictable and proven earnings, can be bought at a reasonable prices and companies that have “economic moats” or a unique advantage — there’s a simple way to do just that.
Using Berkshire’s U.S. Securities and Exchange Commission 13F filing, you can invest (and hopefully profit) like a pro.
“I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag,” Buffett once wrote. “We like to buy the whole business or, if management is our partner, at least 80%. When control-type purchases of equity aren’t available, though, we are also happy to simply buy small portions of great businesses by way of stock market purchases. It’s better to have a part interest in the Hope Diamond than to own all of a rhinestone.”
If you’re not looking to buy up companies across the United States, stick with the basics and make stock market purchases in Warren Buffett’s signature style.
Still not sure where to start? Let’s take a look at three top Berkshire Hathaway stocks that Buffett is watching now.
Berkshire Hathaway Stocks: Kroger (KR)
Over the last weeks, shares of Kroger (NYSE:KR) rallied from a February 2020 low of $26.87 to a high of $30.64. The rally comes after Berkshire Hathaway disclosed it bought 18.9 million shares for $549.1 million.
“Obviously, it’s a big vote of confidence in Kroger, the management team and its strategy,” Oppenheimer analyst Rupesh Parikh said. “We don’t know if it’s Warren Buffett or some of the other portfolio managers that made this investment. But it’s a clear positive to have Warren Buffett involved, and it definitely helps the stock from a support perspective.”
However, not everyone agrees with Berkshire Hathaway’s purchase. Jefferies analyst Christopher Mandeville argues there’s no long-term appeal with Kroger, as it continues to lose share to its competition. He also argues return on invested capital continues to deteriorate.
R5 Capital analyst Matt Siler also disagrees with Berkshire.
“While we have great respect for Berkshire, its track record in consumables is mixed (Kraft (NASDAQ:KHC) recently and Walmart (NYSE:WMT) a few years ago). We see most of the risk to the upside on Kroger more around events, including selling real estate or some form of M&A, as our research strongly points to continued business pressures.”
It’s not clear exactly how this investment will play out, but Kroger stock is definitely one for Buffett aficionados to add to their lists.
Since the start of February 2020, shares of Biogen (NASDAQ:BIIB) exploded from a low of $269.76 to a recent high of $336. This rally comes after Berkshire disclosed it bought 649,000 shares of Biogen, worth $192 million. Berkshire’s bet may be riding on winning U.S. Food and Drug Administration approval for aducanumab, which is under development for Alzheimer’s disease.
While the drug failed in a 2019 late-stage study, Biogen stunned analysts with an announcement it would file for approval based on new analysis from a larger data set.
If Biogen were to win FDA approval, the stock could explode higher. However, if it again fails, shares of the biotech stock could certainly plunge.
While taking big bets on Kroger and Biogen, Berkshire did reduce its holding in Apple (NASDAQ:AAPL) by 3.7 million shares. It’s possible that Buffett had nothing to do with this decrease. We have to remember that his investing team can buy and sell stocks.
Still, Berkshire has a monumental stake in a company that just posted its highest quarterly revenue ever thanks to the iPhone 11, iPhone 11 Pro and records set by the services and wearables division.
“Our very strong business performance drove an all-time net income record of $22.2 billion and generated operating cash flow of $30.5 billion,” Apple CFO Luca Maestri said about the first quarter. “We also returned nearly $25 billion to shareholders during the quarter, including $20 billion in share repurchases and $3.5 billion in dividends and equivalents, as we maintain our target of reaching a net cash neutral position over time.”
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.