A Glimpse Into Warren Buffett's Portfolio

By Arthur Pinkasovitch | June 15, 2010 AAA
A Glimpse Into Warren Buffett's Portfolio

Warren Buffett has been continuously in the headlines. From his criticism of Kraft's share purchase of Cadbury to the more recent questioning regarding Moody's operations, Buffett's activities are closely watched and scrutinized.

Following his simple rule "Be fearful when others are greedy, and be greedy when others are fearful", Buffett is the envy of the investment community.Although his image may partially be tarnished by the recent wave of accusations against Berkshire Hathaway, Warren Buffett is undoubtedly the most successful investor of our time.

IN PICTURES: World's Greatest Investors

Picking Buffett's Brain
His brilliance is the envy of the investment community, with admirers eager to pick his brain - some paying top dollar to do so. In a recent online auction to dine with Warren Buffet, the winning bid was a record $2.63 million. Last year's winning big reached almost $1.7 million, while in 2008 it reached $2,110,100.

For those who can't afford to cough up those types of funds, a cheaper way to gain insight into Buffett's investment strategy is to study the stocks he invests in. Knowing what is inside the billionaire's portfolio allows one to implement a "follow the pros" investment strategy.

Food Stocks
Warren Buffett's largest holding is Coca Cola (NYSE:KO), a company that was picked for its high profit margins and low business risk. Berkshire currently owns 200 million Coke shares which have a total value of nearly $10.3 billion. Kraft (NYSE:KFT) has 107 million of its outstanding shared held by Buffett for a holding value of $3.1 billion. Although Buffett recently sold 31 million shares of Kraft, he views their shares as undervalued.

Financials
Moody's Corp. (NYSE:MCO) is currently under investigation for the assigning of overly optimistic bond ratings. Because Buffett owns 13% of Moody's, he was forced to testify in court. Other major financial sector stocks Berkshire Hathaway holds include Well Fargo (NYSE:WFC) and American Express (NYSE:AXP), its second and third-largest holdings with 320 million and 152 million respective shares. After falling to nearly $10 during the peak of the recession, American express has gained over 300% to trade at $41.50.

Energy
Despite that Warren Buffett is not typically known for his investments in energy plays, he currently holds significant positions in ConocoPhillips (NYSE:COP) and NRG Energy (NYSE:NRG), along with a minor $26 million investment in Exxon Mobil (NYSE:XOM). When reducing many of his positions in the first quarter of 2010, Buffett sold 9.4% of his ConocoPhillips holdings. Nonetheless, this oil and gas giant still has over $1.8 billion worth of shares held by the famous investor.

Consumer Staples
Proctor & Gamble (NYSE:PG), Wal-Mart (NYSE:WMT), Johnsons & Johnson (NYSE:JNJ) and Nike (NYSE:NKE) are some of the well-known consumer goods providers held by Warren Buffet. Berkshire currently has a $4.8 billion dollar investment in Proctor in Gamble and $550 million dollars is invested in Nike. These companies are known to have superior management, a key requirement in Buffett's investment decisions.

The Bottom Line
Despite that Buffett has recently received much media attention for unloading certain positions, he is a firm believer in the buy-and-hold investment strategy. Coke, for example, has remained part of the Berkshire portfolio since 1988; American Express has been held even longer.

As the third-richest person in the world, with an accumulated net worth of $47 billion according to Forbes, Warren Buffett chooses investments carefully. Stocks in his portfolio should definitely be considered for hidden value. (For more, see Think Like Warren Buffett.)

Catch up on the latest financial news in Water Cooler Finance: The iPhone Launch, Buffett's Lunch And BP's Lashing.

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