Warren Buffett, the chief of Nebraska-based Berkshire Hathaway, is one of the most successful investors in the history of the stock market. His investment firm now has a portfolio value of $293 billion with holdings concentrated in the consumer goods and finance sectors. In recent years, Buffett has stockpiled more than $100 billion in cash at his firm, mostly for share buybacks. His investing strategy, which has largely ignored the explosive growth offered by tech companies, is often criticized in the finance world as he nears the end of his stellar career.
In May, at a shareholder meeting, Buffett addressed some of his critics by sharing a list of the most valuable companies in the world in 1989, when Buffett was still only at the beginning of his long career in value investing. The interesting thing about the list, according to Buffett, was that none of them are at the top today. The quip was aimed at tech giants that have reached over $1 or $2 trillion in market caps and have loads of cash to spend but have hit regulatory roadblocks in growth investing due to antitrust legislation and questionable decision-making at the helm.
Despite claims to the contrary, Buffett has made handsome returns on some of his tech-related investments in recent years. For more than a decade, he has backed BYD, the oldest China-based firm in the automotive and electric battery business. The company has seen share price soar 259% in the first seven months of this year. It now has a market capitalization of more than $112 billion, almost twice the size of Wall Street favorite Nio, another Chinese firm operating in the electric vehicle sector.
Some of the top stocks in the investment portfolio of Berkshire Hathaway at the end of the second quarter of 2021 were Apple Inc. (NASDAQ: AAPL), Bank of America Corporation (NYSE: BAC), and American Express Company (NYSE: AXP), among others discussed in detail below. The top five holdings comprise more than 75% of the entire portfolio. The success of Buffett through his value investing strategy, averaging more than 20% in annual returns for almost fifty years, has been an exception in the finance world, especially in recent years.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Stocks to Buy According to Warren Buffett
10. Charter Communications, Inc.
Number of Hedge Fund Holders: 75
Charter Communications, Inc. (NASDAQ: CHTR) is placed tenth on our list of 10 best stocks to buy according to Warren Buffett. The firm is based in Connecticut and markets broadband and cable services. Latest filings reveal that Berkshire Hathaway owned 5.2 million shares in the company at the end of June that are worth $3.7 billion. This represents 1.28% of the investment portfolio of the Buffett-led company.
On August 11, investment advisory Argus maintained a Buy rating on Charter Communications, Inc. (NASDAQ: CHTR) stock and raised the price target to $900 from $775, noting the firm was gaining high-speed internet and wireless subscribers after having upgraded the network.
At the end of the second quarter of 2021, 75 hedge funds in the database of Insider Monkey held stakes worth $19 billion in Charter Communications, Inc. (NASDAQ: CHTR), up from 74 the preceding quarter worth $16 billion.
In its Q1 2021 investor letter, , an asset management firm, highlighted a few stocks and Charter Communications, Inc. (NASDAQ: ) was one of them. is what the fund said:
The portfolio’s quality bias and valuation discipline have generated compelling returns over time with typically strong relative results in more challenging environments as it did through the first three quarters of 2020. However, that same quality bias tends to create a more challenging relative performance environment for the Strategy during periods of sharp economic acceleration, which tend to benefit stocks that are more commodity linked or of lower quality. This has been the case during the vaccine- and stimulus-driven rally experienced late last year and during the most recent quarter. Sectors that lagged in the quarter included communication services, where Charter trailed after generating robust returns earlier in the recovery.”
9. DaVita Inc.
Number of Hedge Fund Holders: 39
DaVita Inc. (NYSE: DVA) is ranked ninth on our list of 10 best stocks to buy according to Warren Buffett. The firm operates from Colorado and provides kidney dialysis services. According to the latest data, Berkshire Hathaway owns 36 million shares in the company that are worth more than $4.3 billion. This represents 1.48% of the portfolio of the investment firm of Warren Buffett at the end of June 2021.
On July 19, investment advisory Deutsche Bank reiterated a Buy rating on DaVita Inc. (NYSE: DVA) stock and raised the price target to $207 from $150, underlining significant upside in the daily core business of the firm.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm is a leading shareholder in DaVita Inc. (NYSE: DVA) with 1.4 million shares worth more than $172 million.
8. U.S. Bancorp
Number of Hedge Fund Holders: 41
U.S. Bancorp (NYSE: USB) is a Minnesota-based financial services holding company. It is placed eighth on our list of 10 best stocks to buy according to Warren Buffett. Regulatory filings show that Berkshire Hathaway owned more than 128 million shares of the finance firm at the end of June 2021 that are worth $7.3 billion. This represents 2.5% of the entire investment portfolio of the investment firm. Buffett has trimmed stake in the firm by 1% compared to the previous quarter.
On July 16, investment advisory Oppenheimer kept an Outperform rating on U.S. Bancorp (NYSE: USB) stock and raised the price target to $73 from $70, noting that the ongoing loan growth would help drive net interest income and revenue for the company.
At the end of the second quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $8.30 billion in U.S. Bancorp (NYSE: USB), down from 43 the preceding quarter worth $8.33 billion.
In its Q4 2020 investor letter, , an asset management firm, highlighted a few stocks and U.S. Bancorp (NYSE: ) was one of them. is what the fund said:
“On the negative side, one of the Fund’s biggest detractor in 2020 was U.S. Bancorp (USB). Like all banks, U.S. Bank was hurt by the difficult interest rate environment and credit cycle concerns. We believe banks are strong enough to survive the current sector doldrums, and they remain some of the market’s most attractive opportunities.”
7. Verizon Communications Inc.
Number of Hedge Fund Holders: 63
erizon Communications Inc. (NYSE: VZ) is a New York-based communications and technology company. It is ranked seventh on our list of 10 best stocks to buy according to Warren Buffett. Buffett owned over 158 million shares in the company through Berkshire Hathaway at the end of June 2021. These are worth $8.8 billion and comprise over 3% of the portfolio of the investment firm.
On July 22, investment advisory Cowen maintained an Outperform rating on Verizon Communications Inc. (NYSE: VZ) stock and raised the price target to $68 from $66, underlining that the company was one of the best defensive value names on the market.
At the end of the second quarter of 2021, 63 hedge funds in the database of Insider Monkey held stakes worth $10 billion in Verizon Communications Inc. (NYSE: VZ), down from 69 in the previous quarter worth $11 billion.
In its Q1 2021 investor letter, , an asset management firm, highlighted a few stocks and Verizon Communications Inc. (NYSE: ) was one of them. is what the fund said:
“We sold Verizon (VZ) based on concerns over how much they might spend in ongoing spectrum auctions. Management may legitimately view spending billions of dollars to expand their spectrum holdings as necessary, but we believe the payoff will be slow and will make it challenging to grow the dividend at a good pace.”
6. Moody's Corporation
Number of Hedge Fund Holders: 44
Moody's Corporation (NYSE: MCO) is placed sixth on our list of 10 best stocks to buy according to Warren Buffett. The company operates as a risk assessment provider and is headquartered in New York. Government filings reveal that Berkshire Hathaway owned 24.6 million shares in the firm at the end of the second quarter of 2021. These were worth $8.9 billion and represented 3.05% of the investment portfolio of the firm.
On July 29, investment advisory BMO Capital maintained an Outperform rating on Moody's Corporation (NYSE: MCO) stock and raised the price target to $415 from $406, noting that the analytics business of the firm was outperforming with strong recurring revenue.
At the end of the second quarter of 2021, 44 hedge funds in the database of Insider Monkey held stakes worth $16 billion in Moody's Corporation (NYSE: MCO), down from 55 in the previous quarter worth $13 billion.
In its Q4 2020 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Moody's Corporation (NYSE: ) was one of them. is what the fund said:
“Moody’s Corporation provides credit ratings, financial intelligence, and analytical tools to assist businesses in making decisions. Moody’s reported excellent financial results due to continued growth in rated debt issuance. However, the stock detracted on investor expectations that issuance trends will moderate into 2021.The announced retirement of long-time CEO Ray McDaniel may have also weighed on sentiment. We continue to own the stock due to our views of the company’s long runway for growth and strong competitive advantages.”