During the fourth quarter of 2021 Berkshire Hathaways stock portfolio increased by 13% from $293 bn to $331 bn, with the top five shares accounting for 79% of the portfolio.
Apple, the largest investment, accounted for 47.6% of the portfolio with a market value of $157 bn as at 31st December 2021. The number two holding, worth $45 bn, was Bank of America accounting for 14.61% of the portfolio. This was followed by the 8.65% holding in American Express valued at $24.8 bn. Coca-Cola, making up 7.15% of the investments, was worth $23.6 bn, and lastly Kraft Heinz had a market value of 11.7 bn, making up a holding of 4%.
The portfolio consists of 42 individual shares, most of which minutely small relative to the overall size of the portfolio. For example Berkshire's stake in Nu, a Brazilian digital bank holding company, was worth more than $1 billion at the end of 2021. A significant part of Warren Buffets investment strategy, is premised on buying businesses which produce strong cash flow earnings, and he values companies that buy back shares prudently, thereby increasing his ownership stake.
He is a long-term investor, and does not believe in overpaying for companies. In addition, he is not influenced by market price volatility unless something goes wrong with the company. This applies both to listed shares and the many non-listed businesses.
The investment holding company structure consists of four large businesses entities, namely listed investments, significant insurance operations, manufacturing-industrial and retail businesses, and substantial cash and near cash investments, such as money markets and other short term investments.
This powerful diversification enables Berkshire Hathaway to have a solid moat, and it acquires assets at substantial discounts when there is a downturn in markets, such as the holding in BNSF Railroad, which is now one of the crown jewels. The company does not pay dividends, instead it is active in buying back its own shares using its substantial cash pile, which has been value accretive to shareholders as well as being a tax efficient strategy.
The company is not an active trader in listed shares, but can act when it sees opportunities in the market such as the recent Activision Blizzard investment, which proved to be one of those once off jackpots.
Berkshire has exceptional investment skills and outstanding depth in management and consistent delivery returns, with new skills being added to investment management, so that the future of the company should not be of concern. This is a high quality conservative investment holding company which should be a long term investment in share portfolios.