Berkshire Hathaway’s (BRK-A, BRK-B) famed stock portfolio, which typically embodies Warren Buffett’s “buy and hold” maxim, posted stellar returns in 2019.

Some of the top holdings include American Express (AXP), Apple (AAPL), Bank of America (BAC), and Delta Airlines (DAL), according to Buffett’s widely-read annual letter.

Buffett wrote that he doesn't view these investments as "stock market wagers — dalliances to be terminated because of downgrades by 'the Street,' an earnings' miss,' expected Federal Reserve actions, possible political developments, forecasts by economists or whatever else might be the subject du jour."

Rather than stock holdings, Buffett views these as companies Berkshire Hathaway "partly owns." He added that these are companies "earning more than 20% on the net tangible equity capital required to run their businesses" and are profitable "without employing excessive levels of debt."

Berkshire Hathaway’s stock portfolio

1. a. Using your best financial accounting skills honed in class, try to explain the common factors that have led Warren Buffet to have such great success in seeing the value of his stocks increase over time.

2. b. Some companies like Coca-Cola and American Express have increased massively on a percentage basis. Why so much for these stocks?

c. A quick but discerning look at Berkshire Hathaway’s stock documents will reveal uncommonly high ROI for the portfolio over time. Why?

4. d. Are there any real manufacturing companies on the list? Why or why not?

5. e. Other companies owned by Berkshire such as Geico, Dairy Queen, and See’s candies are not on the list. Why the special treatment?

 

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12/31/19 Percentage of Сompany Owned Shares* Сompany Cost** Market (in millions) $ 18,874 73,667 33,380 4,101 2,632 22,140 4,147 2,859 8,372 5,857 2,520 1,933 8,864 1,924 18,598 38,159 $ 1,287 35,287 12,560 3,696 151,610,700 250,866,566 947,760,000 81,488,751 5,426,609 400,000,000 70,910,456 12,435,814 60,059,932 24,669,778 46,692,713 21,938,642 149,497,786 10,239,160 345,688,918 American Express Company Apple Inc. Bank of America Corp. The Bank of New York Mellon Corp. Charter Communications, Inc. The Coca-Cola Company Delta Air Lines, Inc. The Goldman Sachs Group, Inc. JPMorgan Chase & Co. Moody's Corporation Southwest Airlines Co. 18.7 5.7 10.7 9.0 2.6 9.3 944 1,299 3,125 890 11.0 3.5 1.9 13.1 6,556 248 1,940 1,195 5,709 349 7,040 28,215 9.0 United Continental Holdings Inc. U.S. Bancorp 8.7 9.7 Visa Inc. 0.6 8.4 Wells Fargo & Company Others*** Total Equity Investments Carried at Market...... S110,340 $248,027 12/31/19 Percentage of Сompany Owned Shares* Сompany Cost** Market (in millions) $ 18,874 73,667 33,380 4,101 2,632 22,140 4,147 2,859 8,372 5,857 2,520 1,933 8,864 1,924 18,598 38,159 $ 1,287 35,287 12,560 3,696 151,610,700 250,866,566 947,760,000 81,488,751 5,426,609 400,000,000 70,910,456 12,435,814 60,059,932 24,669,778 46,692,713 21,938,642 149,497,786 10,239,160 345,688,918 American Express Company Apple Inc. Bank of America Corp. The Bank of New York Mellon Corp. Charter Communications, Inc. The Coca-Cola Company Delta Air Lines, Inc. The Goldman Sachs Group, Inc. JPMorgan Chase & Co. Moody's Corporation Southwest Airlines Co. 18.7 5.7 10.7 9.0 2.6 9.3 944 1,299 3,125 890 11.0 3.5 1.9 13.1 6,556 248 1,940 1,195 5,709 349 7,040 28,215 9.0 United Continental Holdings Inc. U.S. Bancorp 8.7 9.7 Visa Inc. 0.6 8.4 Wells Fargo & Company Others*** Total Equity Investments Carried at Market...... S110,340 $248,027

Answer rating: 100% (QA)

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