S&P 500: Warren Buffett Makes All His Cash From Simply 11 Shares

Warren Buffett is having a significantly better yr than most S&P 500 traders. And he can thank a handful of shares for that.

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Simply 11 shares in Berkshire Hathaway‘s (BRKB) just-reported portfolio of fifty U.S.-listed firms — together with Occidental Petroleum (OXY), Chevron (CVX) and McKesson (MCK) — are up this yr, says an Investor’s Enterprise Day by day evaluation of information from S&P World Market Intelligence and MarketSmith. Meaning solely 22% of his shares are up on this tough yr for the S&P 500.

It isn’t a stellar efficiency. It is a decrease hit fee than the S&P 500, the place extra 27% of the shares within the index are up this yr. However the reality highlights how vital Buffett’s runaway winners are this yr. Shares of Berkshire Hathaway are up 2.5% this yr, whereas the S&P 500 is down 17%.

The Supply Of Most Of Buffett’s Large Features

If you’re dropping cash on three-quarters of your shares however nonetheless beating the market like Berkshire Hathaway is that this yr, it pays to see what’s working so effectively.

And for Buffett there isn’t any query what that’s: vitality. Each of Buffett’s high shares this yr hail from the vitality sector. And the vitality sector is the one one among the many 11 S&P 500 sectors which can be up this yr.

Power is the third-largest-weighted sector in Buffett’s portfolio, at 13%. In distinction, vitality is simply 5% of the S&P 500, rating it eighth of all sectors. And that is sufficient to make up for the truth that Buffett’s two largest particular person bets, Apple (AAPL) and Financial institution of America (BAC), are each down roughly 16% this yr.

Wanting At Buffett’s Large Winners

A few of Buffett’s vitality inventory picks, too, have been absolute dwelling runs. Occidental Petroleum, a Houston-based vitality explorer, is Buffett’s high inventory this yr by far, up greater than 142%. That is been an exceptionally good name, trouncing the 64% achieve of the Power Choose Sector SPDR ETF (XLE).

And he is been aggressively including to the place, too. At a portfolio place of $14.5 billion, Occidental is now Buffett’s sixth-largest wager. It is simply behind a few of his perennial favorites like Coca-Cola (KO), which by the way can also be up this yr, by almost 2%.

Berkshire Hathaway now owns greater than 21% of Occidental.

One other of Buffett’s large winners is an vitality play: Chevron. Shares are up greater than 54% this yr. Buffett wager large on it too, magnifying the profit. Berkshire Hathaway’s stake within the firm is valued at north of $31 billion, making it the No. 3 largest place in his portfolio.

Buffett’s Winners: Extra Than Simply Power

That is to not say vitality is the one motive Buffett is having a better-than-the-S&P 500 form of yr. McKesson, a supplier of companies to the pharmaceutical trade, has seen its shares shoot up greater than 46% this yr. At a $1.1 billion place dimension, it is not an enormous wager for Buffett’s Berkshire Hathaway, however it’s not a tiny one both.

And Buffett is sticking with telecom inventory T-Cell US (TMUS) after lastly falling by the wayside on its rival Verizon (VZ). And it is a good factor. Shares of T-Cell — which Buffett continues to be a comparatively small investor in, with lower than 1% of shares excellent — are up greater than 27% this yr.

But it surely’s vital to notice that it is exhausting to judge Buffett’s report based mostly on only one yr — regardless of how dramatic of a yr it has been.

“Do you wish to know why (Buffett) is likely one of the richest individuals on the earth? Partly, in fact, it is that he is compounded cash at a excessive fee,” stated Whitney Tilson of Empire Monetary Analysis. “However most individuals do not totally recognize the equally vital second a part of the equation: He is accomplished it for an extended time frame.”

But it surely’s nonetheless value noting what’s working in a yr like this for the world’s most well-known investor.

Warren Buffett’s Prime Shares This 12 months

Prime-performing shares in Berkshire Hathaway’s portfolio

Sources: S&P World Market Intelligence, IBD

Comply with Matt Krantz on Twitter @mattkrantz

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