For the vast majority of the world’s richest people, 2022 was a year to forget. It’s not just the money lost, though it was staggering: Nearly $1.4 trillion vanished from the fortunes of the world’s 500 richest people, according to the Billionaires Index. Bloomberg.
Within that select group, Warren Buffett he maintains the prestige of being one of the richest and most successful investors in the world. As CEO and Chairman of the conglomerate Berkshire Hathawayhas amassed a personal net worth that exceeds 100,000 million dollars.
According to a report from Forbestwo of his big winning bets in 2022 were Chevron and Occidental Petroleum, which rose 52% and 116%, respectively. That’s an incredible performance in a year where the S&P 500 is down 18% over the past year.
Investors, both novice and experienced, treat the stock trading of Buffett as an indirect prophecy. Because if Buffett buys or sells stocks, there must be a good reason. So by looking closely at his most recent stock movements, you can spot the 12 shares of Warren Buffett that could help successfully hit 2023 earnings targets.
Buffett’s quarterly portfolio disclosure
The US Securities and Exchange Commission (SEC) requires Berkshire Hathaway to disclose your stock holdings quarterly through form 13F. This provides investors around the world with a line of sight into Buffett’s portfolio.
Unfortunately, there is a lag in the data. Berkshire’s most recent 13F, filed on November 14, 2022, describes the company’s holdings as of September 30, 2022. The next quarterly filing is scheduled for mid-February. You can access it through the SEC’s EDGAR database.
Buffett’s top stock holdings by size
Berkshire Hathaway’s stock portfolio at the end of the third quarter had a market value of about 296,000 million dollars. That value is divided into about 50 shares. The table below shows the top 10 portfolio holdings by market value.
A quick look at the table above reveals a surprising lack of diversification. For starters, Buffett has a large stake in Manzana. He is also apparently optimistic about the technology, oil and gas, finance and commodities of consumption.
Buffett on diversification
Buffett is famous for being against the practice of diversification. In his words, “diversification is protection against ignorance”. Diversification limits the negative effect of bad decisions and also limits the positive side of good investment decisions.
Buffett has far more resources and experience than the average investor. So it is less likely to be wrongbut you are better equipped to manage the consequences.
Berkshire Hathaway’s business holdings go well beyond this stock portfolio. The conglomerate directly owns more than 70 companies, including Duracell, Geico Insurance and See’s Candy. So while the stock portfolio appears concentrated, Berkshire Hathaway’s broader business holdings are more diversified.
Stocks Buffett Recently Sold
Buffett is known for his long-term investment strategy. Tends to buy companies that he can keep forever. When he closes or reduces positions it is a sign that the prospects for the company have taken a turn for the worse in Buffett’s eyes.
In the third quarter of 2022, Berkshire Hathaway closed one position and reduced its stake in four others. The table below lists the five companies and how many shares Buffett sold in the last reported quarter.
Buffett exited the REIT Store Capital in the third quarter. Store announced in September that it would be acquired and taken private by GIC and Oak Street, a division of Blue Owl Capital. Presumably, Buffett didn’t see the value in waiting for that transaction to close. This frees up cash to act on other good trades available in this bear market.
Interestingly, Buffett trimmed his holdings in US Bank and Bank of New York Mellon, though he remains heavily invested in Bank of America and American Express. Buffett also closed his Wells Fargo position, first acquired in 2001, earlier this year.
Shares recently bought by Buffett
Berkshire opened three new positions in the third quarter and increased its holdings in five stocks it already held. The following table summarizes these transactions.
In the third quarter, Buffett acquired a significant position in taiwan semiconductorplus smaller stakes in the building materials company Louisiana-Pacific and in the investment bank Jefferies Financial. the three actions they have gone down in the year.
Buffett, a value investor, likes stocks that he can buy for less than their intrinsic value. This is one of the reasons why Buffett often intensifies his buying activity when the market is in trouble. Weak financial markets push share prices temporarily lower. That can lead to bargain prices in good companies with solid fundamentals.
So while Buffett rarely explains why he bought a certain stock, we can surmise a couple of things. At third-quarter prices, Buffett and his team saw long term value at Taiwan Semiconductor, Louisiana-Pacific and Jefferies Financial.
Buffett is also looking beyond inflation and interest rate hikes that could create near-term headwinds for the real estate and financial sectors.
Buffett’s Best Stock Picks
All stocks in Buffett’s portfolio have long-term potential. But some might be a better fit for your investment objectives than others. The table below Showcases 12 Buffett Stock Picks That Analysts Like by 2023, including four strong dividend stocks: Apple, Bank of America, Taiwan Semiconductor, and Visa.
To make these stocks work for you, it helps to adopt some of Buffett’s investing strategies. The main ones are: Keep your focus on the long term, invest in what you know, take advantage of the bargains and trade against the grain.
long term focus
Buffett does not invest for quick profits. In his opinion, the surest path to wealth creation is through growth compounded over decades. Knowing this, he should never assume that a Buffett stock is going to bust quickly. He be patient and look beyond temporary falls.
Invest in what you know
If you don’t understand a company’s business model, don’t invest in it. Buffett himself has historically been unsupportive of technological stocks for this reason. As a shareholder, he must understand how the company makes money, what its enduring competitive advantages are, and the potential threats to those competitive advantages.
Without that vision, it is more difficult to identify the changes in the company’s long-term prospects. As a result, you may miss out on opportunities to increase your position. Or even worse, you can hold on to a stock longer than you should.
take advantage of the bargains
Buffett likes a good bargain. In his opinion, a temporarily low stock price gives you an edge in long-term appreciation. However, this does not mean that you should buy cheap stocks. Instead, look for value. You can find value in good companies at efficient prices.
Trade against the flow
Buffett likes to buy when other investors are selling and sell when other investors are buying. Trading against the current is one of the best ways to increase your investment profits in the long run.
Many investors do not follow this practice because they are afraid of it. It may seem wrong to buy stocks when the market is going downhill. Similarly, selling in a bull market takes you out of the game at the most exciting time. But put those emotions aside and you will see that the math works. Going against the current naturally favors buying low and selling high, and that’s how you make a profit.
Keep these strategies from Buffett in mind as you research the stocks that will support your investment goals in the coming year. 2023 will have its share of surprises. You can be prepared with a portfolio of strong companies you understand, a long-term timetable, and a willingness to chart your own course.
Dramatic drop: The world’s richest people lost $1.4 trillion this year