Where is Warren Buffett investing? That's a question many investors routinely ask to get ideas about where to put their own money.
It's not necessarily a bad strategy considering the tremendous success Buffett has achieved through the years. So where is Buffett investing these days? He has nearly $150 billion invested in one stock -- and it's not Apple(NASDAQ: AAPL).
Buffett's (almost) $150 billion stock
A quick look at Berkshire Hathaway's (NYSE: BRK.A)(NYSE: BRK.B) will reveal that Apple remains the conglomerate's biggest individual stock holding. Berkshire owns 400 million shares of the consumer tech giant worth around $87.4 billion.
Apple isn't where Berkshire has the most money invested, though. That distinction belongs to U.S. Treasuries. At the end of the second quarter of 2024, Berkshire's investments in Treasuries totaled $238.7 billion.
But neither Apple nor U.S. Treasuries ranks as the top holding in Buffett's personal portfolio. It's no secret where the legendary investor has most of his money invested. Buffett's money is primarily in Berkshire Hathway.
As of March 6, 2024, the date of Berkshire's latest DEF 14A regulatory filing, Buffett owned 216,637 shares of Berkshire Hathaway Class A stock and 344 shares of the Class B stock. His combined position in the two stocks is worth $148.8 billion at the time of this writing.
Why having most of his eggs in one basket makes sense
Some investors would be mortified to have so much money tied up in one stock. However, I think Buffett's huge investment in Berkshire Hathaway makes sense.
He once stated, "Diversification is a protection against ignorance." Buffett's point was that if you have a thorough understanding of a given business, investing more heavily in it can work to your advantage.
Having most of his eggs in the Berkshire Hathaway basket has worked exceptionally well for Buffett. Between 1964 and 2023, Berkshire delivered an overall gain of 4,384,748% compared to 31,223% for the S&P 500.
Buffett certainly has a thorough understanding of Berkshire. He has controlled the company since 1965 and served as its CEO since 1970. During his tenure at the top, Berkshire has grown into one of the largest corporations in the world.
Should you own Berkshire Hathaway stock, too?
Berkshire Hathaway probably won't outperform the S&P 500 as handily going forward as it has in the past. But I think the stock remains a great pick for investors whose last name isn't Buffett to own.
Importantly, buying Berkshire Hathaway shares provides a perhaps surprising amount of diversification. The conglomerate owns stakes in over 40 publicly traded companies spanning multiple industries, with Apple, American Express, Bank of America, Coca-Cola, and Chevron ranking at its top stock holdings.
However, Berkshire's diversification isn't limited to its equity holdings. The company's 60-plus subsidiaries also operate in a wide range of industries, including building materials, insurance, manufacturing, and retail.
If you're looking for a stock that should be well-positioned if the stock market sinks, Berkshire could be a perfect fit. Buffett has been hoarding cash because he can't find enough stocks to buy at attractive valuations. As previously mentioned, Berkshire has $238.7 billion in U.S. Treasuries. It also has $42.3 billion in cash and cash equivalents. If the market pulls back significantly, expect Buffett to swoop in and use this massive cash stockpile to buy the stocks of well-run companies at a discount.
Berkshire Hathaway's valuation isn't overly frothy. Shares trade at a forward earnings multiple of 19.8. Although that might be a little higher than Buffett might prefer, Berkshire still used $2.9 billion to fund stock buybacks in the first half of 2024. The answer to our initial question of where Buffett is investing is largely in Berkshire Hathaway itself.
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American Express is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Keith Speights has positions in Apple, Bank of America, Berkshire Hathaway, and Chevron. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, and Chevron. The Motley Fool has a disclosure policy.
