To The Moon

$Berkshire Hathaway(BRK.A)$ CEO Warren Buffett has been nothing short of a money machine since taking the reins in 1965.

As of Mon, 14 Aug 2023 closing bell, he has overseen a nearly 4,400,000% aggregate gain in Berkshire Hathaway Class A shares.

For the record, at end of 2022, Mr Buffett and his team had doubled up the average annualized total return of up to 19.8%, including dividends paid since he took over.

This versus S&P 500 benchmark of 2021’s annualized return of 9.9%.

How To Emulate Mr Buffett’s Success For Individual Investor?

Successful Male & Female investor

This is the easy part.

By paying attention to Berkshire Hathaway’s 13F filing of course (see above).

This provides an overview of existing and new stocks that Berkshire might have added or liquidated from his portfolio in the preceding quarter.

Yes, it might be a little “delayed” as it’s a post purchase announcement.

To top it off, the stock/s might have risen to new heights already.

While the above holds some truth, one must always remember that Mr Buffett is a long-term investor mostly.

This means holding the stocks for mid to long term should be the way to go.

It would be “insightful” to have an idea of Berkshire’s Q1 2023 holdings: before looking at its latest 13F filings,

This gives us an overall view of what has evolved for Mr Bufett & his team on (a) US, (b) US market and (c) its selective industry.

Berkshire Q1 2023 Top 10 Holdings: (in percentage of assets holdings)

1) $Apple(AAPL)$. 46%. Added 2.28%.

• Hardly a surprise that Apple remains as Berkshire’s largest holding.

• Mr Buffett has previously commented that Apple as “a better business than any we own”.

• Historically, Apple has been a physical product innovator - iPhone (2007), iPad (2010) - garnering a loyal consumer following.

• In recent years, it has begun offering services as a product as well - Apple pay (2014), Apple card (2019) and Apple savings account (2023).

• Perhaps it is rumoured future-product that is most highly anticipated - Apple’s electric vehicle.

2) $Bank of America(BAC)$. 9.09%. Added +2.25%.

• Although Apple takes up an outsized portion of Berkshire Hathaway's portfolio, the Oracle of Omaha understands the importance of the financial sector to a country and its economy.

• Hence his next highest resources allocation is Bank of America.

• He takes economic downturns in stride.

• Rather than trying to 2nd guess when recessions will occur, he buys time-tested, well-capitalized financial stocks that can take advantage of disproportionately long periods of expansion.

• To him, Bank of America fits the bill.

3) $American Express(AXP)$. 7.69%. Unchanged.

• Amex (short for American Express) is another testimony of Mr Buffett’s penchant for financial sector stocks.

• Amex has been a continuous holding of Berkshire's for the past 30 years.

• Fact that AmEx can play on both sides of the aisle - as lender to customers, while collecting fees from merchants during transactions processing, is what really entices Warren Buffett.

• Traditionally, Amex has a knack for attracting wealthy cardholders that are unlikely to alter their spending habits during mild recessions. This is an “attractive proposition” that adds to Amex’s operating stability.

4) Coca Cola ($KO). 7.63%. Unchanged.

5) Chevron ($).6.65%. Reduced by -18.76%.

6) Occidental Petroleum ($OXY). 4.07%. Added +8.93%.

7) Kraft Heinz Co ($xx). 3.87%. Unchanged.

8) Moody’s Corp ($MCO). 2.32%. Unchanged.

9) Activision Blizzard ($ACTV). 1.3%. Reduced by -6.22%.

10) HP Inc, Hewlett Packard ($HPQ). 1.09%. Added +15.77%.

Berkshire Q2 2023 Top 10 Holdings:

1) Apple Inc. 51%. Unchanged.

2) Bank of America. 8.51%. Unchanged.

3) American Express. 7.59%. Unchanged.

4) Coca-Cola. 6.92%. Unchanged.

5) Chevron. 5.56%. Reduced by -7.01%.

6) Occidental Petroleum. 3.78%. Added 5.87%.

7) Kraft Heinz Co. 3.32%. Unchanged.

8) Moody’s Corp. 2.46%. Unchanged.

9) HP Inc, Hewlett Packard. 1.07%. Unchanged.

10) Davita Healthcare Partners. 1.04%. New top 10 entrant.

What Have Changed Between Q1 & Q2?

1) Activision Blizzard. 0.35%. Reduced by -70.35%.

• If there is one thing that Mr Buffett does not like, it is uncertainty.

• With the acquisition of Activision Blizzard by Microsoft still a work-in-progress, Mr Buffett has decided to bite the bullet and liquidated most of its holdings in the company; leaving a shell remnant.

• The monies from the sale could be put to “better use” elsewhere especially now that US market is so volatile.

• To Mr Buffett, this presents a buying opportunity on stocks on his radar.

2) General Motors. 0.24%. Reduced by -45.0%.

• According to Wedbush senior analyst Daniel Ives, he believes Berkshire Hathaway decided to reduce the American auto stock is driven by a "potentially bumpy" push into the electric vehicle (EV) market.

• He could not see GM’s future in the electrification of US made cars in the grand scheme of things.

• Without a mid to long term plan/vision is definitely a no-go for Mr Buffett.

• Hence the decisive cut from its holdings despite being a stakeholder in General Motors for the longest time.

• Looking at GM’s stock past 5 years performance (versus S&P 500 performance) strongly advocate that it is time to let go (see above). Agree?

My Viewpoint:

• Let’s assume that it is true that August and September calendar months are the “worst” performing months in the US market.

• Then this presents individual investors an opportunity to take a breather while we (a) re-group and (b) re-strategize our investment plan for the remaining months in 2023 and beyond.

• It is also timely to examine Mr Buffett’s latest 13F filing and see what other stocks in Berkshire Hathaway’s holdings are, that did not make it to the Top 10 (for now).

• Does not mean it would not in the future. It’s all about the stock’s potentials in the mid to longer term as always for Mr Buffett.

• One stock that comes to mind is digital bank - $Nu Holdings Ltd.(NU)$. Nubank is a Brazilian neobank and the largest fintech bank in Latin America.

• It is a fine example of the future of banking in the present time.

• As usual, its lack of airtime by bias western media makes it a “best kept secret” but for how long before Nubank explodes.

• Do you think now is the time to do our homework while the market continues to trend downwards?

• Do you think you can be a successful investor emulating Mr Buffett’s buys?

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