In this article, we discuss the 5 best stocks to buy according to Warren Buffett. If you want to read our detailed analysis of these stocks, go directly to the 10 Best Stocks to Buy According to Warren Buffett.
5. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 33
The Kraft Heinz Company (NASDAQ:KHC) markets food and beverage products. It is one of the favorite food stocks on Wall Street. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm First Eagle Investment Management is a leading shareholder in The Kraft Heinz Company (NASDAQ:KHC) with 6.4 million shares worth more than $232 million.
Regulatory filings show that Berkshire Hathaway owned more than 325 million shares of The Kraft Heinz Company (NASDAQ:KHC) at the end of the fourth quarter of 2021 worth $11.6 billion, representing 3.53% of the portfolio. The fund registered no new activity around the stock during the fourth quarter.
In its Q4 2020 investor letter, Berkshire Hathaway highlighted a few stocks and The Kraft Heinz Company (NASDAQ:KHC) was one of them. Here is what the firm said:
“We exclude our Kraft Heinz holding — 325,442,152 shares — (In the list of 15 common stock investments that at yearend were our largest in market value) because Berkshire is part of a control group and therefore must account for that investment using the “equity” method. On its balance sheet, Berkshire carries the Kraft Heinz holding at a GAAP figure of $13.3 billion, an amount that represents Berkshire’s share of the audited net worth of Kraft Heinz on December 31, 2020.
Berkshire and its subsidiaries hold investments in certain businesses that are accounted for pursuant to the equity method. Currently, the most significant of these is our investment in the common stock of The Kraft Heinz Company (“Kraft Heinz”). Kraft Heinz is one of the world’s largest manufacturers and marketers of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee and other grocery products. Berkshire currently owns 325,442,152 shares of Kraft Heinz common stock representing 26.6% of the outstanding shares.
We recorded equity method earnings from our investment in Kraft Heinz of $95 million in 2020, $493 million in 2019 and losses of approximately $2.7 billion in 2018. Equity method earnings (losses) included the effects of goodwill and identifiable intangible asset impairment charges recorded by Kraft Heinz. Our share of such charges was approximately $850 million in 2020, $450 million in 2019 and $3.7 billion in 2018. We received dividends from Kraft Heinz of $521 million in each of 2020 and 2019 and $814 million in 2018, which we recorded as reductions in our carrying value.
Shares of Kraft Heinz common stock are publicly-traded and the fair value of our investment was approximately $11.3 billion at December 31, 2020 and $10.5 billion at December 31, 2019. The carrying value of our investment was approximately $13.3 billion at December 31, 2020 and $13.8 billion at December 31, 2019. As of December 31, 2020, the carrying value of our investment exceeded the fair value based on the quoted market price by $2.0 billion (15% of carrying value). In light of this fact, we evaluated our investment in Kraft Heinz for impairment. We utilize no bright-line tests in such evaluations. Based on the available facts and information regarding the operating results of Kraft Heinz, our ability and intent to hold the investment until recovery, the relative amount of the decline and the length of time that fair value was less than carrying value, we concluded that recognition of an impairment loss in earnings was not required. However, we will continue to monitor this investment and it is possible that an impairment loss will be recorded in earnings in a future period based on changes in facts and circumstances or intentions.”
4. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 61
The Coca-Cola Company (NYSE:KO) is a Georgia-based beverage firm. It is one of the long-term holdings of Berkshire. The fund first purchased a stake in the company in the fourth quarter of 2010. It has featured in the portfolio constantly since then. At the end of December 2021, the fund owned 400 million shares of The Coca-Cola Company (NYSE:KO) worth $23.6 billion, representing 7.15% of the portfolio.
Other top hedge funds are also bullish on The Coca-Cola Company (NYSE:KO) stock. Among the hedge funds being tracked by Insider Monkey, Chicago-based firm Citadel Investment Group is a leading shareholder in The Coca-Cola Company (NYSE:KO) with 10.6 million shares worth more than $632 million.
3. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 57
American Express Company (NYSE:AXP) is a New York-based payments and travel company. It is one of the top payment stocks in the hedge fund universe. Among the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading shareholder in American Express Company (NYSE:AXP) with 15.7 million shares worth more than $2.5 billion.
According to the latest data, Berkshire Hathaway owned over 151 million shares of American Express Company (NYSE:AXP) at the end of the fourth quarter of 2021 worth $24.8 billion, representing 7.49% of the portfolio.
In its Q2 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and American Express Company (NYSE:AXP) was one of them. Here is what the fund said:
“In financials, American Express has done an excellent job demonstrating the resiliency of its franchise in the midst of a global pandemic that drove a 60% decline in its core travel and entertainment business. The company’s spend-centric model has been helped by fiscal stimulus ensuring a flush consumer, while management continues to execute well by adding millions of new consumer and small and medium business accounts, which should benefit the franchise over the medium to long term. We remain optimistic regarding the company’s prospects as travel and entertainment activity rebounds, adding to our position in the quarter.”
2. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 72
Bank of America Corporation (NYSE:BAC) provides banking and financial products. Securities filings reveal that Berkshire Hathaway owned more than 1 billion shares in Bank of America Corporation (NYSE:BAC) at the end of December 2021 worth $44.9 billion, representing 13.57% of the portfolio.
Bank of America Corporation (NYSE:BAC) is one of the most prominent bank stocks. At the end of the third quarter of 2021, 72 hedge funds in the database of Insider Monkey held stakes worth $46.4 billion in Bank of America Corporation (NYSE:BAC), down from 87 in the previous quarter worth $46.5 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Bank of America Corporation (NYSE:BAC) was one of them. Here is what the fund said:
“Higher long-term interest rates supported financials such as Bank of America, which has shown both defensive and offensive characteristics in the past year. We believe it continues to be the least risky large bank from a credit standpoint, with conservative underwriting and controlled risk taking, a leading consumer deposit franchise, scale and technology. It is also a leader in its commitments to sustainability, or as it terms it, responsible growth. Disclosure and reporting at all levels form a large part of this commitment, including gender diversity and equality, environmental commitments and support of communities in which it operates. In the first quarter Bank of America announced it is setting a goal of net-zero greenhouse gas (GHG) emissions in its supply chain and operations, and notably also in its financing activities, before 2050.”
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 120
Apple Inc. (NASDAQ:AAPL) is a California-based technology firm. Among the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading shareholder in Apple Inc. (NASDAQ:AAPL) with 63.9 million shares worth more than $11.3 billion.
Latest filings indicate that Berkshire Hathaway owned more than 887 million shares of Apple Inc. (NASDAQ:AAPL) at the end of the fourth quarter of 2021 worth more than $157 billion, representing a whopping 47.5% of the portfolio.
In its Q1 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”
You can also take a peek at 9 Tech and Software Stocks to Buy According to Hamilton Helmer’s Strategy Capital and Analysts Are Downgrading These 10 Stocks.
