Warren Buffett is Buying These 10 Stocks!

[Music] Please [Music] Okay, but in all seriousness, I love getting to see what stocks Warren Buffett is buying and selling. You're going to want to stick around until the end of this list because there's definitely some shockers here. Let's get right into it.

So, the first new stock Buffett added to the portfolio is Capital One Financial, ticker symbol COF. Buffett bought nearly 10 million shares of this company, making the size of his stake nearly one billion dollars, and Berkshire now owns roughly three percent of the entire company and just made itself one of the largest shareholders. The company did 34.3 billion dollars in revenue in 2022 and has a P/E ratio of 6.8 times.

Capital One is one of the most recognizable issuers of Visa and MasterCard credit cards in the U.S. The company offers credit and debit card products, auto loans, and other consumer lending products. Capital One operates through three business segments: credit card, consumer banking, and commercial banking. The company's credit card business is its largest segment, accounting for roughly 65 percent of revenue and 45 percent of its loans.

This segment provides credit cards to both individuals and small businesses. The consumer banking segment accounts for approximately 25 percent of revenue, and this segment is one that's most like a traditional bank, taking in deposits from customers and then making loans to people and businesses. Here, Capital One is a big player in U.S. auto lending, providing loans for people to buy vehicles, and the third segment is commercial banking. This segment offers various banking services to larger businesses and commercial real estate. This segment generates about 10 percent of Capital One's revenue.

While Capital One is involved in more traditional banking services, its core business is still what it is best known for: credit cards, an area Buffett is extremely familiar with. You see, Berkshire owns around 20 percent of the credit card company American Express, and they've had this position since 1991. However, Buffett's personal experience investing in American Express goes back even further than that. Before he was the CEO of Berkshire, Buffett ran an investing partnership that would today be referred to as a hedge fund.

His fund bought a five percent stake in American Express all the way back in 1963, which means that Buffett has been an investor in the credit card industry for a whopping 60 years. He's been investing in this industry since virtually the start of it. Interestingly enough, while Buffett is definitely an expert on the credit card business, he or someone on his team may have gotten the idea from a familiar face. Take a look at this: if you look at the list of the larger shareholders in Capital One, there is a firm called Davis Advisors.

Capital One is one of Davis Advisor's largest positions in its portfolio and is a stock the fund has held for years. Davis Advisors is run by a man named Chris Davis, and he joined the board of Berkshire Hathaway in 2021, putting him in Buffett's inner circle of close friends and business associates. It wouldn't really surprise me if Buffett and his investing team discussed this idea with Chris Davis before deciding to get involved in this. This just cements why it's so important to follow the portfolio of great investors.

Even Warren Buffett, the greatest investor of all time, does this, and it can lead to your next great investment idea. The second new stock that got added to the Berkshire portfolio is Diageo, ticker symbol DGE. Listed on the London Stock Exchange, Diageo did 15.5 billion pounds in revenue in 2022 and trades at a P/E ratio of 22.7. Diageo produces, distills, and markets adult beverages. The company's products include vodkas, whiskeys, tequilas, gins, and beer, and the portfolio of brands includes some of the most well-known in the industry: Smirnoff Vodka, Captain Morgan Rum, Johnny Walker Whiskey, Bailey's Irish Cream, and Tanqueray Gin.

Diageo also makes beer, including the Guinness brand and wine. These are just some of the company's 200 different brands it owns throughout the world. Diageo is what is referred to in the investing world as a serial acquirer, and a serial acquirer is a company for which acquisitions, which is just a fancy way of saying buying smaller companies, is a key element of its strategy. In the adult beverage industry, the so-called barriers to entry are low, which means it doesn't take a ton of money or even experience to launch a new alcoholic beverage brand.

But even though it's relatively easy to do that, it's actually very difficult to scale that brand into a significant business. Diageo's growth model is simple: the company keeps close tabs on new and existing brands that are growing. When the company has identified a fast-growing brand in a high-growth category, they then reach out to that brand and see if they have any interest in being bought out. Diageo has a few reasons for employing this particular strategy. Its core brands are mature and established, meaning that growth areas slow.

The other reason has to do with the scale of Diageo. The company has over 200 brands and does business in 180 countries, which means that it has great relationships with stores and distributors across the world. Diageo acquires the brand and then uses its scale and a massive marketing budget to help that newly acquired brand grow even faster. Believe it or not, this actually isn't Buffett's first time investing in this company. In the early 90s, Buffett made a sizable investment in Guinness, one of Diageo's predecessor companies. This was one of the largest positions in the Berkshire portfolio at the time and the first major investment Buffett made outside of the U.S.

However, this ultimately turned out to be a pretty mediocre investment for Buffett. Guinness stock only increased by 10 percent over the next 10 years. Only time will tell if things turn out better this time for Buffett and Berkshire. The third new stock that got added to the Berkshire portfolio is Vitesse Energy, ticker symbol VTS. The company had revenue of 300 million in 2022 and trades at a forward P/E ratio of 9.3 times. According to the company's website, Vitesse Energy is an independent energy company engaged in the acquisition, development, and production of non-operated oil and natural gas properties in the U.S.

Put in even more simple terms, the company is a passive investor in oil wells. Vitesse partners with companies that operate the well and then puts up the money to acquire the well. Then they get a financial return in exchange for putting up that money. When described in those terms, the business model sounds pretty simple. Prior to doing the research for this video, I had never even heard of Vitesse Energy, and there's actually a good reason for that that I will cover shortly. With a market cap of around 610 million, Vitesse is a small company by Berkshire standards.

Berkshire tends to only invest in companies that have large market caps, with hundreds of billions of dollars to invest. It's not worth Buffett and his investment team's time to focus on small companies. Even if Berkshire wanted to buy the entire company, Vitesse Energy would make up just a fraction of a percentage point of the entire portfolio and cash position. However, Berkshire got a taste of Vitesse stock without ever buying it. Let me explain. Vitesse Energy is what is referred to as a spin-off, and a spin-off is where a publicly traded company separates part of its business into a separate company, which creates a standalone new company.

In this particular case, Vitesse Energy was part of Jefferies, a prominent investment bank. Owning stakes in oil wells was not part of Jefferies' core investment banking business, so as a result, Jefferies management decided to spin it off. For every 8.5 shares of Jefferies someone owned, they received one share in the newly created Vitesse Energy. As a sizable shareholder in Jefferies, Berkshire thus also became a sizable shareholder in Vitesse. Spin-offs are surprisingly common with publicly traded companies; it provides a company a tax-efficient way to get rid of a business they no longer wish to have, and shareholders who receive the new, newly issued shares in the spin-off can then decide themselves whether they want to hold on to them or sell the shares on the open market.

It wouldn't surprise me if Buffett and Berkshire decide to dump these shares in the not-so-distant future. In addition to these three new stocks that got added to the Berkshire portfolio, Buffett also added to seven of his existing positions. If you're enjoying this video, I think you would really like a value investing course I'm currently in the process of putting together. I want to make this course as valuable as possible for people, so it would mean a ton to me if you would take just 90 seconds to fill out a quick survey in the description and pinned comment.

As a thank you, I will send you a free downloadable PDF of Warren Buffett's investment checklist. You can use this as a reference in your own investing. We are at roughly 600 submissions and have the goal of getting to 1,000 before launch. Now, back to the video. Berkshire had nearly 94,000 shares to its position in entertainment company Paramount Global, ticker symbol PARAA. Paramount did 30 billion in revenue in 2022, and the stock currently trades at a P/E ratio of 8.5 times. Paramount Global is one of the world's largest media companies. The company produces and distributes entertainment content through studios, networks, streaming services, live events, and merchandise.

Berkshire is the largest shareholder in this company, owning a staggering 15.3 percent of the entire business. Buffett also added 89,000 shares to a stake in the financial services company Citigroup, ticker symbol C. Citigroup did 75 billion dollars in revenue in 2022 and currently trades at a P/E ratio of six times. Citigroup is a diversified financial services company offering a broad range of various financial services to consumers, small businesses, and corporations. It is best known for its investment banking business.

However, Citigroup also offers retail brokerage, corporate banking, and cash management products and services. Berkshire now owns nearly three percent of the company, making it the largest non-index fund shareholder. 4,000 additional shares were also purchased in Markel, ticker symbol MKL. Markel did 11.7 billion dollars in revenue in 2022 and currently trades at a P/E ratio of 19 times. Markel is frequently referred to as a mini Berkshire Hathaway, and its core business is insurance. In the insurance industry, customers pay money for policies before any claims would have to be paid out by the issuer.

The money that’s sitting at the insurance company waiting to be paid out is what is referred to as float. Insurance companies can then go out and invest that float and keep the profits on those investments for themselves. Markel invests that float in a combination of stocks and entire businesses. If that at all sounds familiar, that's exactly what Buffett does at Berkshire. The only difference is Berkshire Hathaway's market cap is 725 billion dollars while Markel's is 18 billion. Berkshire now owns 3.5 percent of the company.

Next up on the list is Bank of America, ticker symbol BAC. Buffett added over 22.7 million shares in the bank. Bank of America did 95 billion dollars in revenue in 2022 and currently trades at a P/E ratio of 8.2 times. Bank of America is one of the world's largest financial institutions. The bank services range anywhere from providing simple checking accounts for individuals all the way to complex banking products for large multinational companies and everything in between. Bank of America has been a core holding in the Berkshire portfolio for years now.

It looks like Buffett took advantage of the recent share price decline due to the collapse of Silicon Valley Bank to add to the stake. Berkshire Hathaway is the largest shareholder in Bank of America, owning nearly 13 percent of the company. Get ready because the next one on the list is a shocker. Berkshire bought an additional 20.4 million shares in Apple, ticker symbol AAPL. Apple did 394 billion dollars in revenue in 2022, and the stock currently trades at a P/E ratio of nearly 30 times. Apple is a business that doesn't really need any introduction; it's arguably the most recognizable brand in the world. At a market cap of the staggering 2.75 trillion dollars, it's also the most valuable company in the world.

Apple is the largest position in the Berkshire Hathaway portfolio. The reason why it's so surprising to me that Berkshire is adding to Apple is because, at 30 times earnings, the stock is by no means cheap. For reference, when Berkshire first started buying Apple stock in early 2016, the stock was trading at a P/E ratio of closer to 11 times. Apple's valuation has increased so much that even some loyal Buffett and Berkshire followers are calling Berkshire to cut its stake in the company. With the stake in Apple approaching six percent of the entire company, it looks like Buffett and Berkshire disagree.

Berkshire also added to its stake in oil company Occidental Petroleum, ticker symbol OXY. Berkshire had a nearly 17.4 million shares during the quarter. Occidental had revenue of nearly 37 billion in 2022 and the stock trades at a P/E ratio of 6.8 times. Occidental is in the oil and gas industry. The company explores, develops, produces, and markets crude oil and natural gas. The company has three segments: oil and gas, chemical, and midstream and marketing. The oil and gas business accounts for nearly three-fourths of the business and is the main driver of the company's performance. Berkshire owns nearly 25 percent of the company and has warrants to acquire even more.

It was rumored at one point that Buffett was going to acquire Occidental entirely, but he's put those rumors to rest. At the 2023 annual meeting, Buffett said that even though he continues to grow the stake in the company, he has no intention of buying it. The final stock that Buffett was buying is computer hardware company HP, ticker symbol HPQ. Buffett had nearly 16.5 million shares of the company, and the company had 63 billion dollars in revenue in 2022. The stock currently trades at a P/E ratio of 8.4 times. HP provides computing, imaging, and printing systems for businesses and homes. Berkshire first started acquiring shares in the company in early 2022.

Since then, the stock has been under pressure, at one time falling roughly 40 percent from its peak. It looks like Buffett and the team are using the weakness in the shares to increase their position even further. Berkshire is the largest shareholder in the company with a stake worth 12.3 percent of the entire business.

It wasn't all just sunshine and rainbows at Berkshire in the first quarter of 2023. In addition to buying these 10 stocks we just discussed, Buffett also sold shares in 12 different companies, completely exiting out of four of them entirely. Buffett sold down Berkshire's position in Amazon, Aeon, Ally Financial, Activision Blizzard, Celanese, Chevron, McKesson, and General Motors. The four names that exited the portfolio completely were Bank of New York Mellon, RH, Taiwan Semiconductor, and U.S. Bancorp. Given that Buffett has frequently talked about how he doesn't, quote unquote, trim positions, it will be interesting to see how many of the eight names still currently in the portfolio will be gone the next time we do this update.

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