When the stock market was booming in the 1990s, Buffett was worried it was overvalued. His prediction came true, as the dot-com bubble burst. However, he also gave investors a lesson in investment history. Between 1964 and 1981, the US economy increased by almost five times, and sales of Fortune 500 companies more than quadrupled.
Nu Holdings
In its recent 13F
filing, Berkshire Hathaway outlined its position in Nu Holdings Ltd, a Brazilian bank that is expected to IPO in late
2021. Buffett's company has been buying
Nu Holdings stock since last quarter and is one of the largest American
investors. However, this filing doesn't mean that Buffett personally bought any of the company's shares. It only
reveals the holdings as of December 31.
While Nu Holdings has had a bumpy ride in
recent months, the company has shown impressive top-line growth. Its revenue
increased 244% year over year in the second quarter. However, the company
reported a loss of more than twice as much as the year prior due to higher
general and interest expenses and an allowance for credit losses.
In its June quarter, Nu
reported a record number of customers. Its retail and SME customers both
reached record highs. In addition, Nu launched its direct-to-consumer
investment platform NuInvest in the
second quarter, which has helped it reach 5 million active users. Nu also
reported a record customer base in Brazil, which represented 36% of the
country's adult population.
Buffett's Nu Holdings stock has been making
headlines since its listing in December 2021. Its Brazilian fintech business model has been
attracting investors. SoftBank, a Japanese conglomerate, recently bought 22
million shares in Nu Holdings for an
average price of $3.74. It will be listed as a pre-IPO investor when the
company goes public in December 2021.
General Re
Warren Buffett's
portfolio includes some of the world's largest companies. Apple, American
Express, Kraft Heinz, Coca-Cola, IBM, and Procter & Gamble are all under his
management. His investing philosophy emphasizes the long-term value of
companies, empowering top executives to follow their business plans. This type
of involvement with companies aligns with his public persona as a folksy
billionaire.
In recent years, Buffett's investment performance has
been mixed. While he has enjoyed a great deal of success in S&P 500 stocks,
there have been some big blowups. This year, six of the U.S.-listed positions
held by Berkshire Hathaway have lost at least 35%. This includes financial firm
Nu Holdings (NU) and technology play
Snowflake (SNOW). Other positions that are losing value include General Motors
(GM), which is considered a consumer discretionary stock.
Buffett's investments have included a massive increase in
stakes in two major airlines. Despite his deep roots in the Chicago area, he
has been critical of the airline industry in the past. In 2013, he called the
airline industry a "death trap" for investors.
Some investors are
applying Buffett-like principles to technology stocks. Tom Marsico, a former
Janus 20 manager, is one such investor. His portfolio combines value stocks
with technology. His picks would warm the heart of Buffett's teacher Ben
Graham. However, while the tech boom continues, he will probably continue to
underperform. In the meantime, investors may linger on the tortoise-beating second-largest share metaphor.
Berkshire Hathaway
Buffett's investment philosophy revolves around finding investments
with high margins of safety. That means he'll focus on companies with good
profits and recognizable brand names. His philosophy also includes investing in
companies that hold their value over a long period.
For example, Berkshire owns 12.6% of the stock of
Bank of America, which is his second largest stock investment. The bank's
management team has impressed Buffett. And while the bank isn't yet profitable,
its stock trades at a discount to its peer group. And Bank of America
prioritizes share buybacks.
The insurance sector is
another area of emphasis for Berkshire. Buffett is a fan of
this sector, and the company recently closed a $22 billion takeover of General
Re. It also paid $2.3 billion for half of Geico, a company with an aggressive
marketing strategy.
Berkshire's equity
portfolio contains dozens of stocks. Some of the company's largest holdings are
American Express, Coke, Gillette, Freddie Mac, and Disney. It is also globally
focused, with a large proportion of its portfolio devoted to global companies.
Moreover, Berkshire owns Aon, a
global firm that provides health insurance, pension administration, and
financial advising.
In other words, Berkshire Hathaway is built on the
companies that Buffet has purchased. That means that its stock price fluctuates
every so often. The stock market will rise and fall, but that is a good thing
for Berkshire shareholders.