We recently published a list of Growth Stock Portfolio: 12 Stock Picks By Warren Buffett. In this article, we are going to take a look at where Formula One Group (NASDAQ:FWONK) stands against other growth stock picks by Warren Buffett.
Warren Buffett’s Berkshire Hathaway portfolio has long been a beacon for value investors looking for high-quality businesses with long-term competitive advantages. Since taking over as CEO of Berkshire six decades ago, the appropriately named “Oracle of Omaha” has outperformed the broader market.
As we approach 2025, some of Berkshire’s assets stand out as promising opportunities, combining excellent fundamentals with acceptable values despite the market’s sustained emphasis on technology and growth stocks.
Berkshire’s CEO is a strong believer in portfolio concentration. Buffett’s investment strategy revolves around choosing companies with significant competitive advantages, effective management teams, and the potential to create regular free cash flow. His concept focuses on buying exceptional firms at acceptable costs rather than inferior enterprises at low rates. This strategy has proven successful across numerous market cycles, with Berkshire Hathaway providing compound yearly returns significantly higher than market averages over several decades.
The “Oracle of Omaha” concentrates on companies he understands, avoiding complex technologies or models with uncertain earnings potential. He looks for companies with pricing power, great brand awareness, and the ability to preserve or grow market share even during economic downturns. Buffett’s conservative yet effective approach has helped him become one of history’s most successful investors.
Following the filing of Berkshire’s 13F on February 14, we now know that 60% ($180 billion) of Buffett’s $299 billion portfolio is concentrated in just four magnificent stocks.
Japanese stock investors are attentively watching Buffett’s letter in the hopes of gaining information that may affect the country’s trading houses. Buffett has previously approved Japanese trading companies, resulting in increased stock value. Market participants will examine his comments for clues about the future of these companies, particularly as they are impacted by decreasing energy prices and pressure from the US government to reduce oil expenses.
As usual, Buffett’s shareholder letter is expected to provide significant insights not only into Berkshire Hathaway’s performance but also into market trends.
Three racing cars competing side by side at a motorsports event, demonstrating the power and precision of the company’s racing technology.
Methodology
For this article, we scanned Warren Buffett’s Q4 2024 portfolio. We then chose 12 stocks with the highest 5-year average revenue growth (YoY) and ranked accordingly.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Formula One Group (NASDAQ:FWONK)
5-year average revenue growth (YoY): 17.14%
Formula One (F1) is a major international motorsport organization that owns the commercial rights to the Formula One World Championship, an annual series of motor races that spans approximately nine months. Formula One Group (NASDAQ:FWONK) primarily operates through its Formula One (F1) group, which focuses on motorsports and entertainment.
According to management’s fiscal third quarter figures for 2024, the current Formula One season is extremely competitive, with the championships for both manufacturers and drivers coming to an end. F1 has done well financially, as seen by a 15% increase in revenues and a 21% increase in adjusted operating income before depreciation and amortization (OIBDA) so far this year. Two more races this season, new collaborations, and enhancements to F1 TV and hospitality services are all responsible for the income growth. Notably, to increase its market presence and global sponsorships, Formula One Group (NASDAQ:FWONK) has inked new business contracts with firms like American Express and LVMH.
F1’s Term Loan B has been refinanced by Formula One Group (NASDAQ:FWONK), which has extended loan maturities and decreased interest margins to increase financial flexibility. The fact that a sizable amount of F1’s debt is at fixed rates offers stability against changes in interest rates.
TD Cowen maintained its buy rating on Formula One Group (NASDAQ:FWONK) shares and increased their price target from $81 to $88. Given past patterns and unique market circumstances, the company believes the European Commission will likely approve the MotoGP acquisition, and they anticipate that predictions for 2025 will rise.
Cooper Investors Global Equities Fund stated the following regarding Formula One Group (NASDAQ:FWONK) in its Q4 2024 investor letter:
“The largest contributors to returns were Booking Holdings (BKNG) and Formula One Group (NASDAQ:FWONK). FWONK is the owner the Formula One, the oldest and most prestigious global motor racing competition. As described in our September Quarterly Letter with our commentary on TKO Holdings, we are attracted to Sports Content assets FWONK’s operating trends continue to be strong on the track and with fan engagement, this is driving incremental monetisation. including the announcement in October of LVMH signing a 10-year global partner agreement, outbidding legacy sponsor Rolex. We continue to see significant value latency in FWONK, including improved monetisation across their key value drivers (Media Rights, Race Promotion and Commercial), the recent acquisition of MotoGP, and the enhanced strategic value from the impending spin-off of Liberty Live Group, which will result in FWONK converting from a tracking stock to an asset backed company.”
Overall, FWONK ranks 3rd on our list of Growth Stock Portfolio: 12 Stock Picks By Warren Buffett. While we acknowledge the potential for FWONK to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FWONK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.