What's Warren Buffett's biggest position in his Berkshire Hathaway portfolio? If I were asked that question, my automatic response would be Apple (NASDAQ: AAPL). But I'd be wrong.
Yes, Apple remains Buffett's biggest stock holding. However, it's not his biggest position. Buffett has more money invested in one asset than he does in Apple, American Express, Bank of America, Coca-Cola, Chevron, and Occidental Petroleum combined.
Buffett's biggest holding by far
Berkshire Hathaway has big bucks invested in its five largest stock holdings. Its stake in Apple is worth $90.7 billion even after Buffett nearly halved the conglomerate's position in the iPhone maker. Berkshire's stake in AmEx totals close to $38.5 billion. Bank of America is a close third, with Berkshire's position weighing in at roughly $37 billion.
The next largest position in Berkshire's portfolio is Coca-Cola, with Buffett's 400 million shares worth around $28.3 billion. Two oil stocks round out the top six, Chevron and Occidental, with Berkshire's stakes totaling nearly $17.6 billion and $14.6 billion, respectively.
In aggregate, Berkshire's positions in these six stocks are currently valued at nearly $227 billion. That's a lot of money, but it isn't as much as Buffett has invested in another asset.
As of June 30, 2024, Berkshire Hathaway's short-term investments in U.S. Treasury Bills totaled $238.7 billion. This amount includes $4.1 billion of the conglomerate's $42.3 billion in cash and cash equivalents invested in short-term U.S. Treasuries with maturities of three months or less.
Why does Buffett have so much money in U.S. Treasuries?
Berkshire has a standing policy to keep at least $30 billion in cash, cash equivalents, and Treasuries. However, that threshold is much lower than the current level, which is the highest ever for the conglomerate. Why does Buffett have so much money invested in U.S. Treasuries right now?
Buffett answered this question in his 2021 letter to Berkshire Hathaway shareholders. At the time, Berkshire's balance sheet included $120 billion of U.S. Treasuries plus another $24 billion in cash. He wrote then that the large amount was "a consequence of my failure to find entire companies or small portions thereof (that is, marketable stocks) which meet our criteria for long-term holding."
That begs the question: What are Buffett's criteria for buying businesses and stocks? He has answered this one in the past, too. In the legendary investor's 2013 letter to Berkshire shareholders, Buffett said he would only invest in businesses and stocks that:
He could "sensibly estimate" an earnings range for at least five years in the future.
Have a price that was reasonable compared to the lower boundary of the estimated earnings range.
Are in his "circle of competence."
There are undoubtedly lots of stocks for which Buffett can determine sensible future earnings estimates. Plenty of stocks are in his "circle of competence" as well. I think Berkshire's huge position in Treasuries is primarily due to stock valuations being too high for him to want to buy -- with a few exceptions, of course.
Should you buy Treasuries, too?
Your investing goals are almost certainly different from Buffett's. But while I doubt most investors will want their largest position to be in U.S. Treasuries, having some of your portfolio in the asset could be wise. Treasuries are a great place to park your cash over the short term while you wait for a potential opportunity to buy stocks at more attractive prices.
I think, though, that some areas of the market offer attractive valuations already. In particular, many small-cap stocks are bargains after lagging well behind large-cap stocks in recent years. With the likelihood that interest rate cuts are on the way, they could perform well going forward.
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American Express is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Keith Speights has positions in Apple, Bank of America, Berkshire Hathaway, and Chevron. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, and Chevron. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
Warren Buffett Has More Money Invested in This Than He Does Apple, AmEx, Bank of America, Coke, Chevron, and Oxy Combined was originally published by The Motley Fool