Warren Buffett Portfolio and Latest Trades

In today's article, I'm going to be talking to you guys about the stocks that Warren Buffett is currently buying during this market drop correction, meltdown, or whatever you want to call it, many stocks are down right now. And in typical Warren Buffett fashion, when stocks are falling, he typically goes out there and starts buying up stocks.

And so far this year has been no exception. In fact, Berkshire Hathaway just released the numbers and all the moves that they made during the first quarter of this year. And it was the most money that Buffett has ever spent in a single quarter, since all the way back to the financial crisis of 2008. That's pretty crazy. 

So in other words, Buffett has been spending a ton of money out there in the market during this fall and buying up a lot of stocks. In fact, there were 15 different stocks in total that Buffett purchased during the first quarter. Now I am going to pick 7 stocks and run through each of these stocks and give you my personal opinion on each one of them. 

#1. Number

Stock number one, it seems very fitting to kick things off here with Apple($AAPL), which is not only one of Buffett's most favorite stocks of recent history, but it's actually his number one largest investment right now as well at over 40% of his portfolio and worth an unbelievable over $155 billion that Berkshire Hathaway has invested in this company. 

And during the first quarter of this year, Buffett took a dip in the stock price as an opportunity to buy more of the stock increasing his position by little less than half a percent. Now, that might sound very small, but because his position is already so massively large, it was actually an increase of close to 4 million shares. 

Now looking at the stock, Buffett has actually said that he would have purchased more of it even in this first quarter if it hadn't already recovered by so much around the end of March. But what's funny is that Apple actually proceeded to fall even more in the following months by around 10% in both April and May, leaving it even lower than where it was when Buffett was buying it. 

So it's probably a good bet that Buffett is going to purchase more of it here in the second quarter as well, especially since Buffett is so in love with the stickiness of Apple's business. Now by selling customers or premium hardware at high prices like the iPhone, the iPad, iMac Apple Watch air pods, you get the idea.

And then they add on subscription services to those devices. And Apple is able to get their users hooked on their ecosystem, which results in recurring sales and profits every year. As you know, customers continuously upgrade and add on more and more products and services.

Now the result has been gigantic sales and profits doing over $350 billion in revenue and close to 100 billion in net income just last year alone. The only problem with Apple is that it can sometimes be a little cyclical and coming off of their explosive growth in 2021. They're expected to return to mid-kind of single-digit growth going forward.

At their massive size, though that growth is still very impressive. But with a weak macro economy that is dealing with inflation. And at risk of going into recession, Apple's business could struggle a bit in the coming years. And that's why investors have mostly sold out of the stock by so much recently. 

I actually own Apple stock myself, but I bought it at lower prices last year. And I'm currently up over 12% on my position. So I'm not really planning to buy any more at this time, as valuation is still a little high for me even after the drop. They've got a PG ratio of almost 2.5, which is more than double that of Google who I've actually been buying a lot of recently in Google. 

However, I do still like them long term and I plan to hold on to my position for many years into the future just because of how sticky the businesses with a very loyal fan base. The amazing financials they have a huge cash pile over $200 billion in cash and investments that Apple can use in the future to invest in new areas for growth like the rumored Apple car for example.

#2. Number

Stock number two Buffett also purchased some more of General Motors($GM), which was an increase of over 3% at over 2 million new shares purchased, making his current stake in the company worth over $2.7 billion. And this one is very interesting. It's definitely a mix of value, but with some risks, so opinions on it do vary wildly. 

But I understand why Buffett took the gamble. Here. GM is a legacy automaker that owns major brands like Chevrolet, Buick, GMC, Cadillac, Hummer and more. And like the other legacy players in the market, they've seen their sales get destroyed over the years as consumer trends shift away from ice vehicles in favor of electric vehicles.

Which is a trend that has only accelerated recently, thanks to the record rising gas prices for GM specifically, both their sales and profits were in heavy decline in both 2019 and 2020. Before Seeing a large recovery last year, and even though their sales are actually expected to climb by 20% this year and another 8% Next year.

Their profits by EPS are actually expected to drop in each of those years, and only average less than 3% Over the next five. Now the reason is due to super heavy investments that they need to make in order to transition over to electric vehicles. For contrast, to give you an example here, Tesla who went all in on EVs a long time ago, they're actually expected to grow their EPS by 40%, on average during the same time.

And GM also eliminated their dividend and their share buybacks during the pandemic. And they have yet to restore them because they need to invest so much, you know, they need to invest as much of their cash as possible into electric vehicles. So they just haven't really been able to afford to pay those dividends, share buybacks and stuff like that. 

Now, I actually do agree with that strategy, though, as GM really needs to go in much heavier into the Evie market if they really want to survive this global transition to electric. And that does seem to be what they're doing, as they're investing over $35 billion in electrification through 2025.

And they plan to release 30 New EVs by that year as well. Still, I just think that GM is an aging brand. And to be honest, I'm a little surprised that people still buy their vehicles. So it's hard for me to be an investor in them, because it kind of goes against my philosophy of really buying companies that I actually like their products a lot. 

Having said that, I gotta admit that this talk is very attractive at these levels. Buffett bought it sometime in the first quarter where it fell by 10% in January 11% In February, and another 5%. In March, I'm betting that Buffett is still buying here too, because the stock proceeded to fall by another 13% in April and then 6%. In May. 

At this point, I completely understand why Buffett is buying the stock at a PE ratio of only around five. This is definitely a classic value play by Buffett. It's just not a stock that I'm buying yet, but it's definitely on my radar.

#3. Number

Stock number three, that's going to be Restoration Hardware ($RH), who Buffett increased his position on by almost 20%, leaving his total stake in the company valued at over $700 million. Now this is a home decoration and furnishings retailer that operates over 100 Different brick and mortar stores across the US and Canada. 

And despite the retail Apocalypse brought on by the rise of online shopping, RH has actually been able to increase both their sales and profits consistently over the years, including a giant growth spurt last year of over 30% likely due to so many people staying home during the pandemic and working on renovating their homes. 

But even after that they're still doing their typical mid to high single digit growth percentages. And my guess is that Buffett is still buying the stock too because it fell another 23% this month in May. And its current valuation looks pretty attractive too. With a PE ratio of only 10 and the PEG is less than 1. 

I think we've got yet another classic value play here from Buffett and I think it's probably a good move. The only reason why I'm not buying RH myself is because well first of all, I don't really know much about their business because their scores are too high. And for me, I don't think I would ever shop at them. 

But more importantly, I think they're too dependent on American consumers being wealthy, which may be a bit of a gamble right now considering the rise of inflation, the risk of recession and the risk of the housing bubble possibly bursting at some point. I still think it's a good long term bet but I personally rather buy other stocks that have businesses that I'm more interested in myself and that I would have a nicer time tracking. 

#4. Number

Stock number four, we've got Liberty Media Formula One Series C ($FWONK) who was famous for their Formula One racing, which is a nine month long motor racing competition, as well as the related video games and fantasy games. And during the first quarter, Buffett upped his stake in the company by a whopping 264%, leaving his stake worth close to $540 million. 

Since then, though, the stock has been very volatile, so it's a little hard to tell Buffett is still buying it, it actually soared by 15% in March, which made Buffett's purchase look like a smart move. But since then it's crashed by around 12%. At these current levels, though, the stock is up close to 100% in the past five years, is currently in the upper half of its 52-week range. 

And because of their lack of profitability, the valuation is also sky high with a forward PE ratio that is over 1,000% more expensive than the sector and a price to sales ratio that is more than 300% more expensive than sector.

So for me, I feel that it's a spec stock, which I already own way too many of and because I've never been into Formula One racing myself either. There's just no way that I would feel comfortable ever really touching this stuff. It's definitely a past for me.

#5. Number

Stock number five, that's going to be the giant oil and gas company Chevron Corporation ($CVX), which Buffett increases his position by over 300% of in the first quarter, leaving his stake worth over $25 billion. And if you know, Buffett's history with energy stocks, he seems to never really be able to make up his mind on them, or perhaps more appropriate appropriately, we can say that he often tries to time this specific market.

For example, he sold most of his Phillips 66 position in 2019, but added over 150% to his Occidental Petroleum stake and 40% to his Suncor stake in 2020. He fully sold out of 66, but increased oxy and Suncor and entered a new position in Chevron. Then in 2021, he fully exited Suncor and sold more than half of his Chevron only to then buy more of it in the second half of last year. 

And again here in 2022. And granted, the oil and gas sector can be super volatile at times. So if you can properly time it, then you're going to make some very nice returns. But that also leads to a lot of risks. And that's why I generally stay away from it myself, it's just too much of a headache. 

I'm not very good at timing, that kind of stuff. As more of a long-term-minded investor, I generally prefer pure-play renewable energy stocks, because that's where I really think that the overall market is heading in the future. And I can just kind of invest in those and leave it there and not really touch it. 

But Chevron, I would say overall, it's not really a stock that I plan to buy myself. But I do admit that it's looking pretty good for Buffett so far during the pandemic lockdown, so use of gas went down and thus crash the stock. But since then, things have opened back up, the economy is open, and the stock has been skyrocketing ever since which was only accelerated this year with the rise in price and demand for oil following the Russia-Ukraine conflict. 

Year to date alone, the stock is up close to 50% and is now trading near an all-time high. And thanks to all the cash that they've been generating from the rising oil prices. Chevron is returning a lot of those profits back to shareholders with buybacks and over a 3% dividend yield. That's not very bad. You know, that's pretty good. 

#6. Number

The number six stock. We've got a stock that I actually used to own myself a couple of years ago before selling out of it, but it has always remained on my radar and that is Activision Blizzard($ATVI) who is the famous video game developer and publisher of such popular titles like Call of Duty, Warcraft, Overwatch, Diablo, and even mobile games like Candy Crush.

Buffett went ahead and increase his position in the company by over 330%, raising his stake up to over $5 billion. What's funny, though, is that Buffett wasn't even the one who initially bought the stock that was actually first done by one of his two partners, it was either TED or Todd late last year. 

But after it was announced that Activision was being acquired by Microsoft, Buffett himself decided to buy more of the stock as basically a bet that the deal would, in fact, go through. Microsoft is buying the stock at $95 a share. And the deal has already been approved by the board of directors as well as shareholders, but it's still waiting for regulatory approval. 

As such, the stock is still trading more than 20% away from that $95 mark, because of the risk that the deal doesn't go through. Buffett literally came out and said though, he said, quote, if the deal goes through, we make some money. That's why he bought it. And then he also said, and if the deal doesn't go through, who knows what happens, so maybe he'll hold on to it, we don't really know. 

But personally, I think the deal is likely to go through. And I'm actually planning to buy a very small amount of the stock myself just as a fun kind of short-term gamble. And considering that the stock used to trade for almost $100 A share before the deal was even announced.

I think the overall risk-reward ratio here is just worth it as a gamble. I got you to know, you have to know what you're doing with the risk you're taking. And I think I'm okay with that myself. And I would say that I liked the move by Buffett here overall. 

#7. Number

The seventh and final stock. We've got Floor & Decor Holdings ($FND), which is another played by Buffett on the home retail market. In this case, FND mostly sells hard surface flooring and related accessories through their warehouse-like stores, which they currently operate more than 130.

For me, it's a pretty boring business that I'm not very interested in. And it's also very similar to Rh and you probably need a healthy economy and housing market with room to grow. But Buffett went ahead and picked up some more shares in the first quarter of growing his position by a massive 466%. 

And now valuing his steak at over $380 million. Since then, the stock has continued to crash through losing another close to 15% through April and May. So Buffett may be adding to his position at this time considering that the stock has now lost more than half its value and a city near a 52-week low. 

But overall, they actually look pretty attractive considering the really high revenue growth of typically around 20% or more every year, that's very high growth. But like I said, this type of stock just isn't really the right fit for the type of investor I am, I would just be way too bored owning the stock, and I wouldn't really feel motivated enough to keep track of their markets and their competitors.