The diversification not a priority for Warren Buffett. To the Oracle of Omaha “Diversification is not necessary if you know what you are doing.” Therefore the 85% of your portfolio is located in three well-identified sectors according to Sean Williams en The Motley Fool: Information technology, finance and consumer staples.
In terms of the world’s biggest investors, Warren Buffett deserves to be in a class of his own. Since he assumed the position of CEO of the conglomerate Berkshire Hath Rg-A and Berkshire Hath Rg-B in 1965, has created more than $ 500 billion in value for his company’s shareholders and oversaw a 20% average annual return for Berkshire shares. Taking into account the accumulated earnings to date for Berkshire Class A shares, the Oracle of Omaha has generated aggregate earnings in the share price of almost 3.400.000%.
Despite these huge returns, diversification has never been high on Buffett’s list. In fact, he once said, “Diversification is protection against ignorance. It makes very little sense to those who know what they are doing.” By the looks of the Berkshire Hathaway portfolio, Buffett and his team know what they are doing.
As of September 16, the portfolio of $ 316.4 billion Berkshire concentrated on just three sectors, which made up roughly the 85% of assets invested.
A good chunk of Warren Buffett’s portfolio, about $ 137 billion, is invested in technology stocks. But this figure is a bit misleading, since it only owns two information technology companies: Apple and Snowflake. Apple accounts for $ 135 billion of this $ 137 billion position.
Buffett has regularly referred to Apple as the “third business” from Berkshire Hathaway. It is one of the most recognized brands in the world, has exceptional customer loyalty, and is a regular leader in the innovation column.
Within the United States, the iPhone is the undisputed leader in market share. The introduction of 5G-capable devices should lead to a multi-year product replacement that raises sales and cash flow for your product segment.
However, it is also in the midst of a transformation that will make it a platform-based company. Relying on services and subscriptions should reduce the long-term revenue accumulation associated with product cycle replacements and further expand the company’s operating margin.
“I would be remiss if I didn’t mention that Buffett loves the Apple’s strong return on equity program. Berkshire is generating annual income of nearly $ 800 million through dividends, and regular share buybacks are providing a positive increase in earnings per share for Apple, ”says Williams.