London, UK, 5th Feb 2022, ZEXPRWIRE, The stock market has been anything but boring over the last year, and it’s not just growth stocks that have done well. Some of our most richly valued companies like AT&T Inc (T), Berkshire Hathaway Inc. (BRK-B), and Coca Cola Co (KO) are all outperforming their peers as they weather this storm in stride with profits intact!
Grand Pacific Trade Broker Mark Douglas says Warren Buffett is the most successful investor of all time. The Berkshire Hathaway investment portfolio has delivered a compounded annual growth rate of 20% over the last half century, which is why his current net worth exceeds $72 billion. His stock holdings now account for more than 95% of net worth and he remains chairman and CEO.
We were curious about Mr. Buffett’s biggest moves as an individual investor, so we took a close look at SEC filings going back to the 1980s. (See SEC filings here) We focused on his purchases because it’s much easier to make money buying great companies than selling them!
Between 1981 and 1988 Warren Buffett bought 46 companies adding nearly $4 billion in market value compared with just 1 divestiture that led to a $18 million loss.
His portfolio was heavily weighted towards the finance sector at the time, including Manufacturers Hanover Corporation (now part of JPMorgan Chase & Co.(JPM)),Chase Manhattan Corp. (now part of JPMorgan Chase & Co.(JPM)), GEICO(the auto insurer), Salomon Inc.(“The Worst Bond Fund of the Decade” by Barrons Magazine in 1991), and General Reinsurance Corp. Buffett also bought shares in media companies like Los Angeles Times-Mirror, Capital Cities/ABC, and The Washington Post Company , which owns Newsweek magazine among many other assets.
Today he holds large stakes in Wells Fargo & Co. (WFC), US Bancorp (USB), M&T Bank Corp. (MTB), and Bank of America Corporation (BAC) The numbers show that he built large positions in these companies over several years and has only continued to add to them. (At end of 2003)
He bought shares of US Bancorp back when it was a regional bank with just 40 branches and less than $1 billion in assets, but quickly recognized the opportunity to grow the company by expanding its presence throughout Minnesota, Wisconsin, Iowa, South Dakota, Michigan, North Dakota, and Illinois. His stake is now worth roughly $1.4 billion!
Buffett started buying Wells Fargo for around $50 per share in late 1990s under the premise that there were only so people who would ever want a small personal bank account. He was right of course, and now he owns roughly 10% of the company worth around $15 billion!
Buffett’s foray into financial services wasn’t without its bumps along the way. His investment in Salomon Brothers, which had become a highly successful bond trading operation under John Gutfreund, unraveled after revelations that it attempted to mislead clients about prices for US Treasury securities. (see Washington Post-Salomon Inc.) The Securities and Exchange Commission fined the bank $190 million, and it lost several key clients including Buffett himself who ended up dumping his $700 million stake at just $28 per share!
Nonetheless Buffett made more than 8 times his money on Salomon, but you’d probably be hard pressed to find anyone who bought at the bottom and held on until now. If Buffett was a hedge fund manager, this would be remembered as one of his greatest trades ever!
In 1984 Berkshire Hathaway had investments in just 30 companies with market value totaling $315 million (including Borsheim’s Fine Jewelry), but today it holds around 60 businesses that are worth roughly $147 billion!
To facilitate this rapid growth Warren Buffett turned to less liquid equity markets like private placements which offered large blocks of stock at low prices while also allowing him to personally select new management teams. (Many people don’t realize that part of this deal is very lucrative for managers) This included Preferred Stock deals like USG Corp, Preferred Stock deals like First Empire State Corp, and Preferred Stock deals like United States Realty, all of which Buffett held for many years before selling for significant gains.
One of the most recent and profitable investments made under this structure was Microsoft Corporation (MSFT), which he bought in 2003 as a preferred stock yielding 10% annually. The company now trades at $30 per share and has risen nearly 600%, but it could have been much higher if the Dividend hadn’t been capped back then!
When you consider that Berkshire Hathaway is worth roughly $200 billion today, then his purchase equates to around $6 billion in profits over just 5 holding periods! (see why value investors win) It’s also worth noting that several stocks were also acquired using warrants such as National Indemnity, Suncor Energy, and ConocoPhillips.
While Warren Buffett made a name for himself in large cap stocks like Coca-Cola, American Express, and The Washington Post Company, he’s also had a tremendous amount of success with small to mid-cap companies. Today he holds stakes in Capital Cities/ABC, The Gillette Company, General Dynamics Corporation (GD), The Procter & Gamble Company (PG), Dow Chemical Corporation (DOW) AMR Corp. (AMR)
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