Rumors of Warren Buffett's investing demise are always greatly exaggerated. When Buffett dumped airline stocks near pandemic lows in early 2020 and continued his condemnation of Bitcoin throughout the latest cryptocurrency market rally, the Buffett detractors once again piled on with their typical criticisms. Buffett may be turning 91 years old in August, and he may still rely on an old-school, long-term, value investing strategy. However, Buffett's track record speaks for itself. Buffett's Berkshire Hathaway Inc. (ticker: BRK.A, BRK.B) is once again outperforming the S&P 500 year to date. Here are the eight hottest stocks in Berkshire’s portfolio in 2021.
Buffett first bought high-end home furnishings stock RH back in the third quarter of 2019, and the stock has been a home run investment up to this point. Since the end of the third quarter of 2019, RH shares are up 314% compared to just a 47.3% gain for the S&P 500 in that time. The RH momentum is showing no signs of slowing down in 2021. In fact, the stock is Buffett's top performer of the year, gaining another 47.4% year to date. Berkshire holds 1.75 million shares of RH stock worth about $1.24 billion
Biogen Inc. (BIIB)
Buffett raised some eyebrows when Berkshire first invested in Biogen in late 2019. Buffett has never been a fan of biotech stocks in general, which are typically considered high-risk speculative investments. For most of the next year and a half, Biogen shares delivered underwhelming results. However, Biogen shares skyrocketed in June when the U.S. Food and Drug Administration approved the company's controversial Alzheimer's drug Aduhelm, making Buffett truly look like the "Oracle of Omaha." Biogen's stock is now up 31.7% year to date and is one of Buffett's top-performing investments of 2021. Berkshire holds 643,022 shares of BIIB stock worth about $226.9 million.
Wells Fargo & Co. (WFC)
Bank stocks have performed extremely well so far in 2021 thanks to a strong U.S. economic rebound and rising interest rates, which help boost net interest margins. Wells Fargo has lagged many of its big-bank peers in recent years and for good reason. After years of misconduct, the Federal Reserve capped the bank's asset growth in 2018. Wells Fargo was once Buffett's largest stock holding, but he cashed out of much of his position in the first quarter of 2021. After gaining 49.4% year to date, Buffett's remaining 675,054 WFC stock shares are worth about $29.39 million.
American Express Co. (AXP)
Buffett first took a stake in credit card giant American Express way back in 1991. In the roughly 30 years since that initial investment, American Express shares have generated a total return of more than 5,420%, far outperforming the S&P 500's 1,800% return. American Express' business took a big hit in 2020 when the health crisis severely impacted spending on travel, entertainment, dining and other categories. However, American Express has been a top economic reopening play in 2021, gaining 40.9% year to date. Buffett now holds 151.6 million shares of AXP stock worth about $26.3 billion.
General Motors Co. (GM)
The next-generation auto industry is a huge long-term investment opportunity. Unfortunately, many of the most popular high-flying electric vehicle stocks are unprofitable and richly valued, which isn't typically Buffett's preferred style. Instead, Buffett is betting on legacy U.S. automaker General Motors, which is investing $35 billion in EV and autonomous vehicle technology through 2025. Meanwhile, GM is still extremely profitable, generating $6.43 billion in net income in 2020. GM shares are up 34.8% in 2021, but the stock still trades at just 8.5 times forward earnings. Buffett's 67 million GM shares are worth about $3.92 billion.
Bank of America Corp. (BAC)
Buffett has always been a huge fan of bank stocks, and Bank of America has clearly taken over as his favorite bank following all the recent issues with Wells Fargo. In fact, Berkshire's 1.03 billion shares of Bank of America are worth about $38.9 billion, making the bank Buffett's second largest stock holding behind only Apple (AAPL). Bank of America shares recently dipped after the bank reported a small second-quarter revenue miss. However, the bank reported that consumer spending has exceeded pre-pandemic levels, deposit growth has been impressive and loan levels are starting to grow. BAC is up 25.5% so far in 2021.
Moody's Corp. (MCO)
redit ratings agency and investment research, tools and analysis specialist Moody's has been an extremely strong performer since the economic chaos began in early 2020. The combination of historically low bond yields and ugly corporate balance sheets triggered a wave of corporate debt issuance, making Moody's credit rating services extremely important to investors. Even though Moody's is facing very difficult year-over-year comparisons in the near term and the stock is already up 30.5% year to date, RBC Capital recently upgraded Moody's and projects sustainable double-digit revenue growth. Berkshire holds 24.6 million shares of MCO stock worth about $9.2 billion.
Liberty Latin America (LILA)
Liberty Latin America is a telecommunications company focused on Latin America. The company was spun off from Berkshire holding Liberty Global (LBTYA) in early 2018, and the spinoff has significantly outperformed the parent in the past year. So far in 2021, Liberty Latin America shares are up 24.7%, and the company is putting up much better growth numbers than telecom investors typically expect. In the first quarter, Liberty Latin America reported 25% revenue growth thanks to its 2020 acquisition of AT&T's (T) Puerto Rico assets. Berkshire holds about $279.6 million in Liberty Latin America's A-class and C-class stock.
- RH (RH)
- Biogen Inc. (BIIB)
- Wells Fargo & Co. (WFC)
- American Express Co. (AXP)
- General Motors Co. (GM)
- Bank of America Corp. (BAC)
- Moody's Corp. (MCO)
- Liberty Latin America (LILA)