We recently published a list of Warren Buffett’s 10 Longest-Held Stocks. In this article, we are going to take a look at where Mastercard Incorporated (NYSE:MA) stands against other Warren Buffett’s longest-held stocks.
Warren Buffett has cemented his legacy as Wall Street’s most successful investor. During the high-flying stock market of the 1960s, he leveraged his investment partnership to acquire Berkshire Hathaway, a struggling New England textile company at the time. Today, the firm is a vastly different entity, boasting a diverse range of businesses from Geico insurance to BNSF Railway, an equity portfolio exceeding $266 billion, and an enormous cash reserve of $325.2 billion. Decades of strong returns have built Buffett’s unmatched track record. Since he took over in 1965, the company’s shares have delivered an annualized gain of 19.8%.
Buffett has famously stated that his ideal holding period for a stock is “forever”. True to his word, the Oracle of Omaha has held onto some of his favorite stocks for the long haul, allowing them to deliver steady share performance and generate passive income for his portfolio over time. Moreover, market analysts and investors alike have consistently praised Buffett’s disciplined, long-term approach to investing, more so now that his firm has become the latest non-tech firm to surpass a $1 trillion market cap, highlighting Buffett’s stock-picking abilities.
However, despite strong market performance through much of 2024, Buffett seems to have adopted a more defensive stance. Concerned about inflated valuations amid high interest rates and worsening economic conditions, he has offloaded significant holdings in companies whose valuations have surged too high. Billionaire investor David Einhorn of Greenlight Capital echoed this in his hedge fund’s quarterly letter, noting Buffett’s cautious approach:
“One could argue that sitting out bear markets has been the underappreciated reason for his outstanding long-term returns. It is therefore noteworthy to observe that Mr. Buffett is again selling large swaths of his stock portfolio and building enormous cash reserves.”
Over the past two years, Buffett has been an active net seller of stocks. His firm offloaded a total of $36.1 billion in stocks during the third quarter, marking the eighth consecutive quarter in which Berkshire was a net seller of equities. At the company’s annual shareholder meeting in May, Buffett mentioned the possibility of a future rise in the corporate tax rate.
Moreover, in his 2023 letter, Buffett also addresses common questions about Berkshire, including whether the company can continue to achieve the same level of outperformance as in the past:
“There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others. Some we can value; some we can’t. And, if we can, they have to be attractively priced. Outside the U.S., there are essentially no candidates that are meaningful options for capital deployment at Berkshire. All in all, we have no possibility of eye-popping performance. Nevertheless, managing Berkshire is mostly fun and always interesting. On the positive side, after 59 years of assemblage, the company now owns either a portion or 100% of various businesses that, on a weighted basis, have somewhat better prospects than exist at most large American companies.”
Our Methodology
To create our list of Warren Buffett’s longest-held stocks, we analyzed his Q3 2024 investment portfolio and selected stocks that he has consistently held for the longest duration. These figures were sourced from the Insider Monkey Database.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A woman using a payment terminal at the checkout of a store showing payment products and solutions.
Mastercard Incorporated (NYSE:MA)
Warren Buffett’s First Major Purchase: 2011
Berkshire Hathaway’s stake in Q3 2024: $1.96 billion
Mastercard Incorporated (NYSE:MA), a global leader in payment technology, serves a diverse range of clients, including consumers, small and medium-sized businesses, government agencies, large enterprises, banks, and credit unions. Known for its strong track record of rewarding investors through dividends, Mastercard Incorporated (NYSE:MA) has remained a favorite of Warren Buffett for more than a decade.
The company has forged strategic partnerships with Amazon Payment Services and Safaricom, Kenya’s largest telecom provider, to boost digital payment acceptance in the Middle East, Africa, and Kenya. Additionally, Mastercard Incorporated (NYSE:MA) expanded its offerings by acquiring Recorded Future, a company specializing in threat intelligence.
Mastercard Incorporated (NYSE:MA)’s third-quarter earnings and revenue topped analyst expectations, driven by strong consumer spending and high demand for its value-added services, pushing shares up by 1.7% after the announcement. The payment technology leader reported adjusted earnings per share of $3.89, above the consensus of $3.74. Quarterly revenue reached $7.4 billion, beating the expected $7.26 billion and marking a 13% year-over-year increase, or 14% on a currency-neutral basis. The company’s performance was fueled by a 10% YoY growth in gross dollar volume to $2.5 trillion and a 17% increase in cross-border volume, both on a local currency basis.
Baird raised its price target on Mastercard Incorporated (NYSE:MA) to $575 from $545 on October 16, maintaining an Outperform rating. The updated outlook reflects optimism about the company’s performance, with third-quarter revenue and earnings per share expected to slightly exceed Wall Street expectations.
Here’s what L1 Capital International Fund mentioned about Mastercard Incorporated (NYSE:MA) in its Q2 2024 investor letter:
“The share prices of Mastercard Incorporated (NYSE:MA) and Visa, both long term Fund investments, have both drifted down over recent months. There have been no dramatic developments, but there has been a general slight softening in the rate of growth of consumer spending in the U.S. and globally, a court decision rejecting Mastercard and Visa’s proposed settlement of a long-lasting dispute with U.S. merchants as well as other modest adverse regulatory developments. We continue to view Mastercard and Visa as two of the highest quality businesses in the world, and both are well placed to continue to deliver attractive, risk adjusted returns to shareholders over time.”
Overall, MA ranks 4th on our list of Warren Buffett’s longest-held stocks. While we acknowledge the potential of MA, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MA 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.
