In this piece, we will take a look at the five finance and investment stocks to invest in according to Warren Buffett’s Berkshire Hathaway. To learn more about the famous hedge fund, its owner, and more stocks, take a look at the 10 Finance & Investment Stocks to Invest in According to Warren Buffett’s Berkshire Hathaway.
5. Visa Inc. (NYSE:V)
Berkshire Hathaway’s Stake Value: $1.7 billion
Percentage of Berkshire Hathaway’s 13F Portfolio: 0.54%
Number of Hedge Fund Holders: 142
Visa Inc. (NYSE:V) is an American payments firm that is headquartered in San Francisco, California. Its platform allows customers such as consumers, financial institutions, government entities, and business partners to conduct digital payments.
Berkshire Hathaway held a $1.4 billion stake in Visa Inc. (NYSE:V) by the end of Q4 2021. It came in the form of 8.2 million shares and represented 0.43% of the investment firm’s portfolio. During the same time period, 142 of the 924 hedge funds polled by Insider Monkey owned a stake in the company.
Visa Inc. (NYSE:V) reported $7 billion in revenue and $1.81 in non-GAAP EPS for its fiscal first quarter, beating analyst estimates for both. Mizuho raised the company’s share price target to $235 from $220 in February 2022, due to its strong fiscal Q4 earnings results.
Visa Inc. (NYSE:V)’s largest investor is Chris Hohn’s TCI Fund Management which owns 23 million shares worth $5 billion.
Artisan Partners mentioned the company in its fourth quarter 2021 investor letter. Here is what the fund said:
“We initiated two new positions in Q4, adding Visa. Visa is a global payments company and is one of the four major US credit card networks (along with Mastercard, American Express and Discover). Visa is accepted at over 80 million merchant locations in 200 countries, interacts with 15 thousand financial institutions and processed 165 billion transactions with $13 trillion of payments and cash volume in the 12-month period ending September 2021. We have always admired Visa’s business, but its valuation prevented it from getting over the hurdle and into the portfolio. As of late, the stock has been caught up in indiscriminate selling as part of a larger unwind trade in a richly valued fintech space. Concerns also exist about Visa’s slowdown in cross-border transactions due to COVID and its net-revenue sharing arrangements with Amazon. This created an opportunity to purchase a very highquality business that benefits from substantial barriers to entry, network effects and several structural growth drivers, including consumer spending growth, the shift from cash to card, increasing ecommerce penetration, market share growth and global expansion. We believe Visa has a long runway for revenue growth as cash and checks continue to lose share. Consumers can’t use cash and checks online, after all. From a “safer” perspective, the company has a rocksolid balance sheet and has a high conversion of net income to free cash flow, which it uses for share repurchases, dividend growth and tuck-in acquisitions.”
4. The Bank of New York Mellon Corporation (NYSE:BK)
Berkshire Hathaway’s Stake Value: $4.2 billion
Percentage of Berkshire Hathaway’s 13F Portfolio: 1.26%
Number of Hedge Fund Holders: 49
The Bank of New York Mellon Corporation (NYSE:BK) is one of the oldest banks in the world as it was set up in 1784 in New York, New York, United States. It offers a host of services to its clients, such as exchange traded funds, accounts, foreign exchange, securities lending, investment, wealth, and retirement management solutions alongside receivables processing and payables management.
For its fiscal fourth quarter, The Bank of New York Mellon Corporation (NYSE:BK) reported $4 billion in revenue and $1.04 in non-GAAP EPS, beating analyst estimates for both. Morgan Stanley upgraded its share rating to Equal Weight from Underweight in March 2022, but reduced the share price target to $58 from $65, outlining that while the Ukraine war will negatively affect banks, The Bank of New York Mellon Corporation (NYSE:BK) is slated to benefit from interest rate hikes.
Mr. Buffett’s investment firm owned 72 million The Bank of New York Mellon Corporation (NYSE:BK) shares by the close of last year’s fourth quarter, in a $4.2 billion stake that represented 1.26% of its investment portfolio. Insider Monkey’s research of 924 hedge funds for the same time period revealed that 49 had owned a stake in the bank.
Jean-Marie Eveillard’s First Eagle Investment Management is The Bank of New York Mellon Corporation (NYSE:BK)’s largest investor after Berkshire Hathaway. It has a $928 million stake through owning 15.9 million shares.
Ariel Investments mentioned the bank in its Q4 2021 investor letter. Here is what the firm said:
“Rising interest rates, after a surprisingly long period of low absolute rates and negative “real” rates, will create a headwind. While there has been much debate about the cause of these low rates, we believe the most important factor has been the $120 billion in monthly federal reserve open market bond purchases and the accumulation of an $8 trillion balance sheet. The former will end, and the latter will shrink. It is not just the Fed that has aggressively purchased bonds, bidding up prices and lowering yields. Bond traders and hedge fund managers have added to positions, confident that being on the same side as the Fed was the wise place to be. Now as the Fed is about to become a seller of bonds rather than a buyer, Wall Street’s “smart money” is likely to follow suit. Against this backdrop, fixed income securities and bond substitutes such as high dividend paying utilities and absolute return hedge funds are substantially overpriced and are not likely to produce attractive returns going forward.
This expectation of a reversion to the mean for interest rates helped 2021 performance, though not as much as we had hoped. The yield on the U.S. 10-year Treasury did indeed increase from +0.92% at the beginning of the year to +1.52% at year-end. An underreported story was the poor performance of bonds last year. The Barclays Aggregate Index declined -1.67% for the year ending December compared to a return of +28.71% for equities as measured by the S&P 500. Interest rates have continued to climb in 2022 with the 10-year Treasury at +1.79% as we go to print. This move higher in rates has contributed to our good, early start to 2022. Smaller positions in The Bank of New York Mellon Corporation (BK) also benefited from higher rates, principally with their ability to invest customer cash.”
3. U.S. Bancorp (NYSE:USB)
Berkshire Hathaway’s Stake Value: $7.1 billion
Percentage of Berkshire Hathaway’s 13F Portfolio: 2.14%
Number of Hedge Fund Holders: 46
U.S. Bancorp (NYSE:USB) is an American financial services company headquartered in Minneapolis, Minnesota. It offers several kinds of accounts, lending services, credit card services, lease financing, asset based lending, and agricultural financing. The company also offers investment and insurance products alongside offering fund administration services to mutual and other funds.
By the end of the fourth quarter of last year, Berkshire Hathaway had held a massive $7.1 billion stake in U.S. Bancorp (NYSE:USB) which came through 126 million shares. 46 out of the 924 hedge funds part of Insider Monkey’s Q4 2021 research had also owned a stake in the financial services company.
U.S. Bancorp (NYSE:USB) raked in $5.68 billion in revenue and $1.07 in GAAP EPS for its fiscal Q4, missing analyst estimates for both metrics. Morgan Stanley reduced the bank’s share price target to $66 from $70 in March 2022, as part of a wider downgrade of the banking sector in the aftermath of the ongoing war in Ukraine.
After Berkshire Hathaway, U.S. Bancorp (NYSE:USB)’s largest investor is Jean-Marie Eveillard’s First Eagle Investment Management which owns 9.4 million shares worth $531 million.
2. Moody’s Corporation (NYSE:MCO)
Berkshire Hathaway’s Stake Value: $9.6 billion
Percentage of Berkshire Hathaway’s 13F Portfolio: 2.91%
Number of Hedge Fund Holders: 58
Moody’s Corporation (NYSE:MCO) is an American risk assessment firm based in New York. It is known for providing services to institutional investors and covers areas such as assessment services on debt obligations, risk management activities, credit research, economic activities, and more.
For its fiscal fourth quarter, Moody’s Corporation (NYSE:MCO)’s reported $1.54 billion in revenue and $2.33 in non-GAAP EPS, in a mixed bag of results that saw it beat analyst revenue estimates and miss them for EPS. Deutsche Bank set a $408 price target for the company in March 2022, as it initiated coverage and stated that the long term demand for data analysts is high in today’s information age.
By the end of Q4 2021, Berkshire Hathaway owned 24 million Moody’s Corporation (NYSE:MCO) shares that were worth $9.6 billion and constituted 2.91% of its portfolio. During the same time period, 58 funds out of Insider Monkey’s 924 hedge fund survey also had stakes in the company.
Moody’s Corporation (NYSE:MCO)’s largest investor after Mr. Buffett’s firm is Chris Hohn’s TCI Fund Management who owns 6.5 million shares worth $2 billion.
1. Bank of America Corporation (NYSE:BAC)
Berkshire Hathaway’s Stake Value: $44.9 billion
Percentage of Berkshire Hathaway’s 13F Portfolio: 13.57%
Number of Hedge Fund Holders: 84
Bank of America Corporation (NYSE:BAC) is another centuries old bank that is headquartered in Charlotte, North Carolina, United States. It has a large list of customers, which includes private individuals, businesses, governments, institutional investors, and large corporations.
Berkshire Hathaway’s $44.9 billion stake in Bank of America Corporation (NYSE:BAC) during the fourth quarter of last year was the second largest holding in its investment portfolio and it came through the firm owning one billion shares of the bank. 84 out of 924 hedge funds surveyed by Insider Monkey during Q4 2021 also owned Bank of America Corporation (NYSE:BAC) shares.
Bank of America Corporation (NYSE:BAC) raked in $22 billion in revenue and $0.82 in GAAP EPS for its fiscal Q4, beating analyst EPS estimates and missing them for revenue. Morgan Stanley upgraded its stock rating to Equal Weight from Underweight in March 2022, but cut down the price target to $49 from $51, stating that increasing inflation grows credit risk and requires more liquidity.
Natixis Global Asset Management’s Harris Associates is Bank of America Corporation (NYSE:BAC)’s largest investor after Berkshire Hathaway. It owns 53 million shares worth $2.3 billion.
Oakmark Funds mentioned the bank in its third-quarter 2021 investor letter. Here is what the fund said:
“Earlier this year, one of our holdings, Bank of America Corporation (NYSE:BAC), announced that it was raising its minimum hourly wage from $15 to $20 and would increase it to $25 by 2025. The company received great press for placing the well-being of its employees above profits. But was it really either/or? Bank of America’s chief human resources officer spoke to the bigger picture: “A core tenet of responsible growth is our commitment to being a great place to work…that includes providing strong pay and competitive benefits to help them and their families, so that we continue to attract and retain the best talent.” Bank of America understood that engaged, high-caliber employees are more productive, less prone to turnover and, therefore, less expensive in the long run. Increasing the pay for employees wasn’t elevating employees above shareholders; it was the right thing to do for employees and for shareholders.
If an increase to $20 was good, why stop there? Why not $50 per hour? Because the benefits the business receives at $50 don’t justify the expense. The bank would no longer be able to price its products competitively and would lose business. The employees would “win” in the short term, but eventually the lost business would lead to job cuts, meaning both employees and shareholders would lose. The negative effects of stakeholder overreach are no different than when CEOs overreach to inflate short-term profits. Both hurt shareholders and stakeholders.”
Disclosure: None. You can also take a look at 10 Best Growth Stocks Under $10 and 12 Best Large-cap Biotech Stocks To Buy Now.
