10 most dominant Warren Buffett stocks

Berkshire Hathaway Inc. (BRK-A) recently released its latest changes to the company’s public equity holdings, as of June 30, 2014. What stood out the most was just how large some of the stakes have gotten compared to the total Buffett portfolio. Recent filings show that Warren Buffett and Berkshire Hathaway have started to become very concentrated in just a few holdings — approximately 58% of the $107.6 billion value of the Berkshire Hathaway Inc.(BRK-B) total equity holdings was concentrated in just four stocks.

24/7 Wall St. wanted to look under the hood of the Berkshire Hathaway portfolio to see what else was going on with the largest holdings. With just four stocks reaching 58% of the total value, there were well over 40 total stocks held. When we looked at the top 10 positions, all of which are stakes over $2 billion as of June 30, then the number is even larger.

One issue stood out when it came to the concentration of holdings. The 13F filing showed the total positions as worth $107.6 billion, but the prior 10-Q filing showed some $116.9 billion. Using the 13F filing, the concentration of stocks is actually far larger. The top 10 holdings came to a market value of $89.8 billion, without consideration of rounding the numbers up and down. So, let’s just call it $90 billion for a full round number. That means that right at 77% of the 10-Q filing securities holdings were held by less than one-fourth of the public stocks.

Now using the 13F filing we took the stakes from that are listed with a total of $107.6 billion, and this $90 billion market value for the top 10 stocks held as of June 30, 2014, then more than 83% of the stock concentration is just in the top 10 stocks. That compares to a market cap for Berkshire Hathaway that is north of $320 billion.

MORE: Major portfolio changes for Buffett and Berkshire Hathaway

As we will show, four of the stakes had market values of more than $10 billion each. The rest were all under $5 billion but also above $2 billion as of June 30. In this analysis, we have shown how much each stake held by Berkshire Hathaway was valued on June 30, 2014. We also listed how much the company’s stake is based on the total outstanding number of shares to show how much influence Buffett can have if he needs to reach out to these companies.

Here are the observations made about the 10 largest Buffett stakes of the entire Berkshire Hathaway holdings.

Wells Fargo

> Value of stake: $25.4 billion

> Total of outstanding: 8.9%

Wells Fargo & Co. (WFC) is Buffett’s top stock holding, and it is the largest bank in America by market cap. It has had a bullish 2014 and has remained firm after earnings. Earlier this year we mentioned that Wells Fargo was the number one in terms of the most valuable global banking brands, but what is interesting is that Buffett stopped adding to this position in 2014 for the first time in years. Wells Fargo’s total brand value alone was estimated at more than $30 billion, according to valuation consultancy firm Brand Finance. Wells Fargo has pledged to increase its shareholder payouts in dividends and buybacks. We also noticed that it had a phantom $30 billion profit in its share buybacks. The Thomson Reuters price target is $54.75, and the highest price target is $63.00.

Coca-Cola

> Value of stake: $16.9 billion

> Total of outstanding: 9.12%

Coca-Cola Co. (KO) recently announced transformative moves by taking large stakes in Monster Beverage and Keurig Green Mountain to enter more markets and to diversify away from sugar-water drinks. Its aim is to boost that top-line growth again in new brands, perhaps on the cheap without spending up for outright acquisitions. Is it possible that Coca-Cola is even trying to change its identity as a defensive stock? A recent proxy fight brought some negative press against Buffett, but he managed to keep that from becoming too much of a focus by the public. Coke recently topped the Corebrand Top 100 Most Powerful Brands of 2014. The Thomson Reuters price target is above $45, and the highest share price target is $53.

MORE: Why are J.C. Penney shares surging?

American Express

> Value of stake: $14.4 billion

> Total of outstanding: 14.49%

American Express Co. (AXP) has continued to benefit from increased card member spending, and its shares were up close to 50% in 2013, a key reason for Berkshire Hathaway to have such a large stake. American Express is effectively the largest independent card issuer, targeting wealthier clients with more solid credit metrics. Buffett has held this stake for decades now, and the dollar-cost average is so low that he doesn’t even have to care about it having a premium valuation and a low dividend yield for new investors. It seems interesting that Buffett has recently built smaller positions in Visa and MasterCard as well — maybe Buffet wants to own a piece of all of the global credit card space.

IBM

> Value of stake: $12.7 billion

> Total of outstanding: 7.03%

International Business Machines Corp. (IBM) marks a bit of a unique position for Buffett. After all, he shies away from technology. IBM was even among some of the top stocks being sold by mutual funds this year. The company’s endless goal of $20 in earnings per share by the end of 2015 has turned into a criticism rather than a good goal, but that also means that IBM trades at only about 9.5 times 2015 expected earnings. IBM loves that it keeps buying back stock, and its services backlog is about $136 billion. What exactly it is that Buffett is attracted to here is a mystery, but all in all it may just be a habit. Still, Buffett has recently grown the position. IBM’s consensus analyst price target is almost $195, and the street-high price target is still up at $225.

Walmart

> Value of stake: $4.4 billion

> Total of outstanding: 1.82%

Wal-Mart Stores Inc. (WMT) has run into a wall in growing sales. Still, it is the world’s largest retailer and is an easy place for Buffett to park money without creating many waves in the market trading. Perhaps that, along with a drop in the stock price, is why Buffett added to his stake recently. Walmart has issued lower guidance of late and it continues to remain under fire with its labor force relations. Its refocus on “Made in America” has yet to be a factor for better or worse, and its move into different store formats seems increasingly like an effort to target almost every level of consumers. It also remains an open issue about whether Bill Simon as the new CEO of Walmart U.S. will be able to rekindle sales growth. The Thomson Reuters estimate for the price target is $80.00, but the highest analyst price target is $90.00.

MORE: Companies that control the world’s food

Procter & Gamble

> Value of stake: $4.1 billion

> Total of outstanding: 1.95%

Proctor & Gamble Co. (PG) is an interesting stake, because the size was slashed in half in recent years. The world’s largest consumer products giant is now also in the process of divesting 90 to 100 brands to focus on core earnings and core brands. Proctor & Gamble was recently named as one of our picks for safest dividends to hold, and it is also among Buffet’s highest yielding dividend stocks. Recent issues have come up with Venezuela and other countries bringing on more foreign exchange risks. One interesting thing about Proctor & Gamble is that it is a defensive stock and it manages to escape broader market carnage on a relative basis when sell-offs occur. The consensus price target of just above $87 remains relatively unchanged from when we released our Bull and Bear case at the start of 2014, but the highest individual price target is all the way up at $97.

Exxon Mobil

> Value of stake: $4.1 billion

> Total of outstanding: 0.96%

Exxon Mobil Corp. (XOM) is a position that only makes sense for Berkshire Hathaway. After all, Buffet has dabbled around in oil and gas players for years, and this stock is so large with its $425 billion market cap that Buffett can move in and out as much stock as he wants without alerting the whole world that he is buying or selling. Exxon is one of the few companies in the world that generates $100 billion or more in revenue each quarter. This is perhaps the most globally recognized company name in the world of oil and gas. The only surprise about Buffett deciding to buy a stake here is 1) that it took so long for him to do so and 2) that Buffett hasn’t dropped all other oil and gas positions to put the funds to work here. Exxon Mobil’s consensus price target is close to $103, but the highest analyst price target is up at $117.

U.S. Bancorp

> Value of stake: $3.5 billion

> Total of outstanding: 4.44%

U.S. Bancorp (USB) is a top super-regional bank in America, and it is a position that Buffett just keeps adding to on a marginal basis quarter after quarter. He has had a stake in this bank for years. U.S. Bancorp is a prestigious brand with a safer credit profile than most large banks, yet it is short of being a mega-cap bank like you might expect of Berkshire Hathaway holdings. Buffett acquisitions have been slow and steady, and he now holds more than 80 million shares. U.S. Bancorp’s consensus price target is $45.15, but the highest analyst price target is $51.00.

Moody’s

> Value of stake: $2.2 billion

> Total of outstanding: 11.68%

Moody’s Corp. (MCO) is another stake that is still rather large yet has been trimmed. Moody’s seems to be getting ever further away from the woes of the ratings blunders during the recession. Buffett had such a large cushion from when he bought the stake years ago that it was likely of far less concern to him than it may have looked like to the rest of us, had we been looking to evaluate it now. Still, this model may no longer be as attractive as it once was. So maybe Buffett thinks he gets insight by being the largest outside shareholder of this ratings agency. Moody’s consensus price target is $95.67, and the highest individual price target is $105.00.

Goldman Sachs

> Value of stake: $2.1 billion

> Total of outstanding: 2.87%

Goldman Sachs Group Inc. (GS) was a stake of more than 12.6 million shares that dates back to the bailouts during the recession. As a reminder, Buffett scored a better deal for Berkshire Hathaway shareholders than the government did for taxpayers in its TARP bailout. It is unknown whether Buffett will consider this a core holding through time, but Goldman Sachs is now a Dow Jones Industrial Average component and therefore has become one of the “too big to fail” banks, even if it has no formal banking operation. The consensus price target for Goldman Sachs shares is $177.68, but the highest analyst target is up at $200.00.

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