Warren Buffett was a net seller of stocks over the last 12 months. However, he still initiated several new positions and added to existing holdings.
The legendary investor undoubtedly liked some of his picks better than others in retrospect. I certainly do. I've ranked every stock Buffett bought over the last 12 months. Before we get to the ranking, I'll give some insight into my thinking.
First, I excluded Berkshire Hathaway itself, although Buffett spearheaded some significant stock buybacks of his conglomerate. Second, I didn't factor in how the stocks have performed since Buffett bought them. Instead, I evaluated the stocks based on the total returns I expect them to deliver going forward. Third, valuation was an important consideration.
With all of this in mind, here are the stocks Buffett bought over the last 12 months, ranked from best to worst -- in my admittedly subjective opinion.
1. Chevron
Buffett sold some shares of Chevron(NYSE: CVX) over the last 12 months, but he also added to Berkshire's stake in the oil giant in the fourth quarter of 2023. Chevron is the fifth-largest position in Berkshire's portfolio.
Why did I rank Chevron first? For one thing, the company's dividend yield of over 4.1% gives it a nice head start in delivering strong total returns over the next few years. The stock is relatively cheap, with a forward price-to-earnings ratio of only 12.2.
I also like Chevron's growth prospects. The CEO of another major oil company (Spoiler alert: It's on the list, too) predicts an oil supply shortage by the end of 2025. Her reasoning appears to be sound to me, even if her timing isn't correct. If she's right, Chevron will be a big winner.
2. Occidental Petroleum
Occidental Petroleum(NYSE: OXY) might be Buffett's favorite stock these days. The Oracle of Omaha has added to Berkshire's stake in Oxy several times over the last four quarters.
In case you haven't already guessed, Occidental CEO Vicki Hollub made the prediction I mentioned about an oil supply shortage. Her company would enjoy a surge in revenue if this prediction comes true, just as Chevron would.
Buffett thinks highly of Hollub and her leadership in advancing carbon capture technology. So do I.
3. D.R. Horton
Buffett bought shares of D.R. Horton(NYSE: DHI) in the second quarter of 2023. He then completely exited Berkshire's position in the homebuilder in Q4. I'm sure Buffett had his reasons for selling, but I still think D.R. Horton is a great stock for long-term investors to buy.
The U.S. still faces a serious housing shortage. D.R. Horton is the country's largest homebuilder by volume (a status it's held for more than two decades). As such, it's well positioned to profit by helping address the housing shortage. Despite delivering exceptional gains since mid-2022, the stock's forward earnings multiple is only 10.7.
4. Lennar
Lennar(NYSE: LEN) is another homebuilder Buffett bought over the last 12 months. Unlike D.R. Horton, though, Berkshire still owns a small stake in this stock.
I like Lennar for the same reasons I like D.R. Horton, but ranked it a little lower because of its slightly higher forward earnings multiple.
5. NVR
Everything I just said about Lennar also applies to NVR(NYSE: NVR). It's the most expensive of Buffett's homebuilder stocks, with shares trading at nearly 15.3 times forward earnings. That's still not too lofty of a valuation, though.
6. Marubeni
Buffett added to Berkshire's positions in five Japanese trading houses in 2023 Q2. He wrote to Berkshire shareholders earlier this year that he expected to hold these stocks "indefinitely."
All five Japanese stocks offer tremendous diversification across a wide range of industries. They're all relatively inexpensive. And they all pay attractive dividends. I've ranked Marubeni(OTC: MARUF)(OTC: MARUY) the highest among this group because its trailing price-to-earnings ratio of 10.9 is the lowest.
7. Mitsui
Mitsui(OTC: MITSF)(OTC: MITSY) is another of the Japanese stocks Buffett favors. It trades at nearly 11.4 times trailing-12-month earnings.
8. Sumitomo
I've listed Sumitomo(OTC: SSUM.F)(OTC: SSUM.Y) as the third Japanese stock Buffett bought over the last 12 months because of its trailing earnings multiple of 12.9.
9. Itochu
Itochu(OTC: ITOCF)(OTC: ITOCY) is the next Japanese trading house on the list. Its shares trade at roughly 13.1 times trailing-12-month earnings.
10. Mitsubishi
Buffett invested the most in Mitsubishi(OTC: MSBHF) among the five Japanese stocks. It's the biggest of the group based on market cap. I've ranked it No. 10, though, because it's the most expensive of the five stocks, with a trailing earnings multiple of nearly 15.
11. Chubb
In late 2023, Berkshire made a "mystery investment" -- a purchase it was allowed to keep confidential. That investment turned out to be big property and casualty insurer Chubb(NYSE: CB).
I don't expect Chubb to be a massive winner. However, it's valued attractively, with a forward earnings multiple of 12.3. Income investors will also like that Chubb has increased its dividend for 31 consecutive years.
12. Capital One Financial
Buffett added more shares of Capital One Financial(NYSE: COF) to Berkshire's portfolio in the second quarter of 2023. Although the stock has soared after moving past worries about the banking crisis last year, it's still inexpensive, with a forward earnings multiple of 9.9.
13. and 14. Liberty Sirius XM Group (tie)
I've lumped two tracking stocks Buffett bought last year together for the No. 13 spot: Liberty Sirius XM Group Series A(NASDAQ: LSXMA), and Liberty Sirius XM Group Series C(NASDAQ: LSXMK). Both stocks reflect the interests of Liberty Media in satellite radio operator Sirius XM Holdings(NASDAQ: SIRI). I'm not enthusiastic about Sirius XM's growth prospects, but these tracking stocks provide a less expensive way to invest in the company.
15. Sirius XM Holdings
Buffett also initiated a small direct stake in Sirius XM in the fourth quarter of 2023. I ranked it behind the tracking stocks because of its higher forward earnings multiple.
16. Atlanta Braves Holdings
Speaking of Liberty Media tracking stocks, Buffett also bought shares of another one over the last 12 months -- Atlanta Braves Holdings(NASDAQ: BATR.A). I like baseball. I like the Braves. However, I'm uncertain how much growth this stock will deliver.
17. Formula One Group
Finally, Buffett added shares of Formula One Group(NASDAQ: FWON.A) to Berkshire's portfolio in the third quarter of 2023. It's also a Liberty Media tracking stock for its investment in Formula 1 racing. My main concern with this stock is that it trades at a nosebleed forward earnings multiple of 48.3.
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Keith Speights has positions in Berkshire Hathaway, Chevron, and Chubb. The Motley Fool has positions in and recommends Berkshire Hathaway, Chevron, Lennar, and NVR. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
