“Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale will give good results” – Warren Edward Buffett
Warren Buffett, the chairman and CEO of Berkshire Hathaway, is one of the most successful businessmen, investors and philanthropists of past two centuries. He only believes in buying businesses that are simple and easy to understand, so it’s crucial to look at Warren Buffett’s favorite stocks, naturally.
Buffett developed a serious interest in investing when he was just 20 years of age, and by the time he was 32, he was already a millionaire. His current net worth stands near $54.6 billion, and his top holdings includes big names like: Wells Fargo & Co (NYSE:WFC), The Coca-Cola Company (NYSE:KO), International Business Machines Corp. (NYSE:IBM), American Express Company (NYSE:AXP) and The Procter & Gamble Company (NYSE:PG).
In his words “Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing”. That is the reason why the top 5 companies in his equity portfolio make a total 73% of his 13F capital.
SEE THE ORACLE’S STOCK PORTFOLIO —>
Buffett believed that once a company is bought, it should never be sold unless there is a major change in its fundaments. Holding a company for a longer duration will give compounding returns to investors.That is the reason why Wells Fargo & Co (NYSE:WFC), a company in which Buffett started investing in during the year 2003, stands tall at numero uno today.
With 19.96% of his total portfolio invested in Wells Fargo & Co (NYSE:WFC), this company takes the top of his investment portfolio. The size of his investments in The Coca-Cola Company (NYSE:KO), International Business Machines Corp. (NYSE:IBM), American Express Company (NYSE:AXP) and The Procter & Gamble Company (NYSE:PG) can be seen here.
Buffett, in a letter to his shareholders once wrote:
“We bought some Wells Fargo & Co (NYSE:WFC) shares last year. Otherwise, among our six largest holdings, we last changed our position in Coca-Cola in 1994, American Express in 1998, Gillette in 1989, Washington Post in 1973, and Moody’s in 2000. Brokers don’t love us.”
Key Lessons from Buffett’s style of Investing
1. Buffett always believes in concentrated portfolio. He says diversification is done by people who are not very sure of what they are doing.
2. Buffett never buys any stock which he doesn’t understand. That is the reason there is no technology and pharmaceutical companies in his portfolio.
3. Magic of compounding – Once you are investing for long term, you will be able to enjoy the magic of compounding.
4. Buffett believe in buying businesses not stocks. Whenever you are buying a stock think as if you are buying a company and not just the stocks of the company.
5. Buffett on Margin of Safety – “The basic ideas of investing are to look at stocks as business, use the market’s fluctuations to your advantage, and seek a margin of safety. That’s what Ben Graham taught us. A hundred years from now they will still be the cornerstones of investing.”
Let’s take a look at how Warren Buffett’s favorite stocks have performed during the first quarter of 2013.
SEE THE LIST —>
Related tickers: Wells Fargo & Co (NYSE:WFC), The Coca-Cola Company (NYSE:KO), International Business Machines Corp. (NYSE:IBM), American Express Company (NYSE:AXP), The Procter & Gamble Company (NYSE:PG)
No. 5: The Procter & Gamble Company (NYSE:PG)
Price at beginning of Q1 : $ 68.65
Price at end of Q1 : $ 77.06
Percent Return : 12.25%
No. 4: American Express Company (NYSE:AXP)
Price at beginning of Q1 : $ 58.33
Price at end of Q1 : $ 67.46
Percent Return : 15.65%
No. 3: International Business Machines Corp. (NYSE:IBM)
Price at beginning of Q1 : $ 194.09
Price at end of Q1 : $ 213.30
Percent Return : 9.89%
No. 2: The Coca-Cola Company (NYSE:KO)
Price at beginning of Q1 : $ 36.99
Price at end of Q1 : $ 40.44
Percent Return : 9.32%
No. 1: Wells Fargo & Co (NYSE:WFC)
Price at beginning of Q1 : $ 35.03
Price at end of Q1 : $ 36.99
Percent Return : 5.60%
