My Top 2 Stocks: Berkshire Hathaway and Accenture

It's good to take a step back once in a while and get a big-picture look at your investments. As part of that process, today I'm sharing my top two stock holdings by dollar amount -- Berkshire Hathaway (NYSE: BRK-B  ) and Accenture (NYSE: ACN  ) .

First, the boring fine print
I'm excluding ETFs and a small bank stock. I use Vanguard ETFs as cheap, long-term ways to index. As for the bank stock, this one trades on average less than 1,000 shares a day. The banking sector is my specialty, but this particular one is too small and thinly traded for me to discuss publicly and be in compliance with Motley Fool guidelines.

Why Berkshire Hathaway?
When a stock becomes one of your largest holdings, either you started with a big bet or your investment has grown over time.

With Berkshire, both are true. I bought a double-sized position in Berkshire Hathaway in late February 2009 (and then added a bit more at the end of last year), and it's up 115% since then. However, just about everything's up from then, and my Berkshire position is actually trailing the market's 129% post-dividend gain.

Am I worried? No.

I bought into the conglomerate Berkshire Hathaway because I could get a quality company at a discount. What made me finally buy shares was seeing the amazing deals CEO Warren Buffett was making. Down markets like 2008-2009 are where the best investors load up on deals. In addition to his own brilliant moves, Goldman Sachs and General Electric each gave him multibillion-dollar sweetheart deals. They did so because their balance sheets and stock prices were in distress. The Buffett capital infusion would help, but the Buffett name was really what they were after.

Since Goldman and GE weren't knocking down my door with those deals, I did the next best thing and invested alongside Buffett in Berkshire Hathaway.

It's been an extremely up market these last four years; I'm confident that Berkshire's slight lag of the market will reverse in the longer term -- especially when we see more turbulence. Like its core insurance products, Berkshire's the kind of company that proves its worth in down times.

Why Accenture?
Unlike my double-sized investment in Berkshire Hathaway, Accenture started as a standard-sized position. Since I bought it in October 2008, it's returned 186% after dividends, versus 75% for the market.

But as with Berkshire Hathaway, the financial crisis gave me an opportunity to buy into quality cheaply. In the case of Accenture, I had been convinced of its quality when I was an employee. The culture of this global consultancy is one that blends hard work with smart competence and a "play fair" attitude.

You can see the results of this culture and its asset-light business model in its return on capital, which routinely exceeds 50%. You can also see it in its net income margin, which has marched upward every year since 2006's 5.8% to last year's 9.3%.

With its hyper-motivated employees and management, I'm confident Accenture will adapt to the ever-changing business landscape and continue to find ways to earn its consulting fees.

Two more great stocks
Berkshire Hathaway and Accenture are my top two stock holdings, but our co-founder, Tom Gardner, recently revealed his top two stocks as well. For the names of that surprising pair of companies, just click here


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