S&P 500: Warren Buffett makes all his money from just 11 stocks

S&P 500: Warren Buffett makes all his money from just 11 stocks

Warren Buffett is having a much better year than most S&P 500 investors. And he can thank a handful of stocks for it.




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Just 11 shares Berkshire Hathawayof (BRKB)’s just-reported portfolio of 50 US-listed companies — incl Occidental Petroleum (ACID), Chevron (CVX) and McKesson (MCK) — are up this year, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. That means only 22% of its stocks are up in this tough year for the S&P 500.

Not a stellar performance. That’s a lower success rate than the S&P 500, where more than 27% of the index’s stocks are up this year. But the fact underscores just how important this year’s Buffett winners are. Shares of Berkshire Hathaway are up 2.5% this year, while the S&P 500 is down 17%.

The source of most of Buffett’s big profits

When you’re losing money on three-quarters of your holdings but still beating the market like Berkshire Hathaway has been this year, it’s worth looking at what’s working so well.

And for Buffett there’s no doubt what that is: energy. Both of Buffett’s top holdings this year are in the energy sector. And the energy sector is the only one among the 11 S&P 500 sectors to rise this year.

Energy is the third-largest sector weight in Buffett’s portfolio, at 13%. By contrast, energy is just 5% of the S&P 500, ranking it eighth among all sectors. And that’s enough to offset the fact that Buffett’s two biggest individual bets, apple (AAPL) and the bank of america (BAC), both down about 16% this year.

Looking at Buffett’s big winners

Some of Buffett’s energy picks, too, have been absolute home runs. Occidental Petroleum, a Houston-based energy explorer, is Buffett’s top holding this year by a wide margin, up more than 142 percent. This was an extremely good call, crushing the Energy Select Sector SPDR ETF’s (XLE) 64% gain.

And he has added offensively at the position, too. With a portfolio position of $14.5 billion, Occidental is now Buffett’s sixth-largest bet. It’s right behind some of his perennial favorites like Coca Cola (KO), which by the way is also up this year, by almost 2%.

Berkshire Hathaway now owns more than 21% of Occidental.

Another of Buffett’s giant winners is an energy play: Chevron. Shares are up more than 54% this year. Buffett also bet big on it, magnifying the benefit. Berkshire Hathaway’s stake in the company is valued at $31 billion, making it the No. 3 largest holding in its portfolio.

Buffett’s winners: More Than Just Energy

That’s not to say energy is the only reason Buffett is having a better year than the S&P 500. McKesson, a provider of services to the pharmaceutical industry, has seen its shares soar more than 46% this year. With a position size of $1.1 billion, it’s not a huge bet for Buffett’s Berkshire Hathaway, but it’s not a small one either.

And Buffett is sticking with the telecom stock T-Mobile USA (TMUS) after finally throwing in the towel on his opponent Verizon (VZ). And it’s good. Shares of T-Mobile — in which Buffett is still a relatively small investor, with less than 1% of shares outstanding — are up more than 27% this year.

But it’s important to note that it’s hard to judge Buffett’s record based on just one year — no matter how dramatic it’s been.

“You want to know why (Buffett) is he one of the richest people in the world? Part of it, of course, is that it has raised money at a high rate,” said Whitney Tilson of Empire Financial Research. “But most people don’t fully appreciate the equally important second part of the equation: He’s been doing it for a long time. temporal.”

But it’s worth noting what works in such a year for the world’s most famous investor.

Warren Buffett’s Top Stocks This Year

Top performing stocks in Berkshire Hathaway’s portfolio

Company Symbol Change from year to date Sector
Occidental Petroleum (OXY) 143.6% Energy
Chevron (CVX) 55.8 Energy
McKesson (MCK) 46.1 Health Care
T-Mobile USA (TMUS) 27.5 Communication Services
Globe Life (GL) 20.1 Financially
Activision Blizzard (ATV) 11.0 Communication Services
Kroger (KR) 6.0 Basic consumer goods
Kraft Heinz (KHC) 5.2 Basic consumer goods
Coca Cola (KO) 2.1 Basic consumer goods
Johnson & Johnson (JNJ) 1.9 Health Care
Markel (MKL) 1.7 Financially
Sources: S&P Global Market Intelligence, IBD

Follow Matt Krantz on Twitter @mackrantz

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