Portfolio concentration is a big reason the Oracle of Omaha has been such a successful investor over six decades.
For decades, no money manager has commanded the attention of Wall Street professionals and everyday investors quite like Berkshire Hathaway‘s (BRK.A -0.67%) (BRK.B -0.81%) Warren Buffett.
This reverence derives from his jaw-dropping outperformance of the benchmark S&P 500 since becoming CEO 60 years ago. In that period, he’s overseen a greater than 6,230,000% aggregate return in his company’s Class A shares (BRK.A), which compares to a total return, including dividends, of around 39,700% for the S&P 500 over the same timeline.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
It’s been a big couple of weeks for Berkshire Hathaway and the Oracle of Omaha’s shareholders. At the company’s annual shareholder meeting on May 3, Berkshire unveiled its first-quarter operating results, and Buffett announced his plan to step down as CEO by the end of the year. Predetermined successor Greg Abel is set to take the reins upon Buffett’s departure.
But this wasn’t the only jaw-dropper of the month. On May 15, Berkshire Hathaway filed its Form 13F with the Securities and Exchange Commission. This filing details which stocks Buffett and his top advisors purchased and sold in the most recent quarter.
In particular, Berkshire’s 13F highlights what may well be Warren Buffett’s best-known investment prowess: his penchant for portfolio concentration. Both he and now-late right-hand man Charlie Munger long believed in putting an outsize percentage of their company’s capital to work in their best ideas.
Following the release of Berkshire’s 13F, Warren Buffett has roughly 58% of his company’s $287 billion portfolio invested in just four unstoppable stocks.
Apple: $63.4 billion (22.1% of invested assets)
Although Apple (AAPL -0.98%) remains Berkshire Hathaway’s largest holding by a fairly significant amount, this position is a far cry from what it once was. At the end of September 2023, Berkshire held 915,560,382 shares of Apple. But as of March 31, 2025, this position had “dwindled” to 300,000,000 shares. If Buffett hadn’t sold a single share, this original stake would now be worth $193.4 billion.
Despite never being too tech-savvy, Warren Buffett’s love for Apple stock stems from his understanding of consumer behaviors. Apple’s customers tend to be incredibly loyal to the brand and are willing to pay a premium price for the company’s products.
This loyalty has come in especially handy with Apple CEO Tim Cook overseeing the steady buildout of his company’s services segment. Locking customers into subscription-based services not only enhances existing loyalty, but it should meaningfully improve Apple’s operating margin over time, as well as lessen the revenue peaks and troughs associated with iPhone replacement cycles.
Something else the Oracle of Omaha is a big fan of is Apple’s premier capital-return program. Inclusive of Apple’s $49.5 billion in share repurchases undertaken in the first six months of fiscal 2025 (its fiscal year ends in late September), it’s bought back around $775 billion worth of its common stock since initiating a repurchase program in 2013. This is helping to grow Berkshire’s stake in Apple without Buffett having to do a thing.
Image source: American Express.
American Express: $45.4 billion (15.8% of invested assets)
Despite Buffett not purchasing any shares of credit-services provider American Express (AXP -1.16%) for a long time, this “indefinite” holding — shares have been continuously held by Berkshire since 1991 — has worked its way up to $45.4 billion in market value and is Berkshire Hathaway’s second-largest holding behind Apple.
The secret to AmEx’s success has been its ability to double-dip during long-winded periods of economic expansion. It’s the No. 3 payment processor by credit card network purchase volume in the U.S., which means it’s a trusted name for payment facilitation. In addition to generating fees from merchants for processing transactions, American Express also acts as a lender, which generates the company interest income and/or annual fees from cardholders.
Similar to Wells Fargo on the banking front, American Express has demonstrated a knack for attracting high earners as cardholders. Individuals with higher incomes are less likely to alter their buying habits during periods of economic turbulence, and they (often) continue to pay their bills. This dynamic positions AmEx to navigate economic downturns better than most lending institutions.
Warren Buffett is generating a monster yield in American Express, as well. Relative to Berkshire Hathaway’s cost basis of around $8.49 per share in its No. 2 holding, AmEx’s $3.28 per share base annual payout works out to a yield on cost of 38.6%!
Coca-Cola: $28.8 billion (10% of invested assets)
If you think American Express has been a fixture in Berkshire Hathaway’s investment portfolio, let me introduce you to well-known consumer goods giant Coca-Cola (KO -0.34%), which has been a continuous holding since 1988. Thanks to an enormous yield on cost, which I’ll touch on in a few moments, this is a position that neither Buffett, nor his successor Abel, are likely to ever sell.
Coca-Cola’s products and geographic diversity are its foundation. Since its sells beverages, which are a basic necessity, it’s pretty well insulated from recessions. Further, with operations ongoing in all but three countries (North Korea, Cuba, and Russia), Coca-Cola has the ability to generate predictable cash flow in developed countries, while moving the organic growth needle in faster-paced emerging markets.
Perhaps no consumer goods company has done a better job of building its brand and engaging with current and prospective consumers than Coca-Cola. It’s leaned into artificial intelligence (AI) and digital media channels as a way to relate to younger audiences. Meanwhile, it has more than a century of history and well-known brand ambassadors that can be relied on to connect with mature consumers.
In February, Coca-Cola increased its base annual payout for a 63rd consecutive year. Taking into account that Berkshire Hathaway’s cost basis on its 400,000,000 shares of Coca-Cola is $3.2475 per share, the new $2.04 annual dividend equates to a yield on cost of (drum roll) 62.8%! Buffett’s company is more than doubling its initial investment in Coca-Cola from dividends alone every 21 months.
Bank of America: $28.2 billion (9.8% of invested assets)
Lastly, there’s money-center goliath Bank of America (BAC -0.32%), which has fallen from Berkshire’s No. 2 holding to No. 4 in recent quarters. Berkshire’s 13F shows that 48,660,056 shares of BofA were sold during the first quarter. Since July 17, 2024, more than 401 million shares of what was a greater than 1.03-billion-share stake in Bank of America have been sent to the chopping block.
The reason the Oracle of Omaha loves financial stocks — aside from it being a sector he understands well — is because they’re cyclical. Instead of trying to guess when inevitable economic downturns will take shape, Buffett has positioned Berkshire’s investment portfolio (and owned assets) to take advantage of disproportionately long periods of economic growth. When the U.S. economy enters one of these multiyear growth spurts, it allows banking giants like BofA to prudently grow their loan portfolio.
Speaking of loans, Bank of America is the most interest-sensitive of all U.S. money-center banks. When the Federal Reserve rapidly increased the federal funds rate from March 2022 to July 2023, no bank enjoyed a bigger boost to its net interest income. Although the Fed is now in a rate-easing cycle, which is typically bad news for the interest income-earning potential of banks, the nation’s central bank is slow-stepping and telegraphing its moves, and thereby allowing BofA to continue to make high-interest loans.
To round things out and keep with the theme, Bank of America has a sizable capital-return program. It’s doling out $1.04 per share in annual dividends, and its share repurchase program has reduced its outstanding share count by nearly 29% since 2017. Retiring a good chunk of the company’s share count has undoubtedly been a positive for BofA’s earnings per share.
