Warren Buffett's stock picking skills are legendary. Thanks to his once-in-a-generation abilities, shares of Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK.B) have compounded at an average annual rate of 20% per year over the past half-century. It's a track record that may never be replicated.
Even at 86 years old today, Buffett remains as active as ever, though he has since added two additional portfolio managers -- Todd Combs and Ted Weschler -- to help deploy Berkshire's billions in capital.
After scanning Berkshire's latest 13-F filing, names including Apple (NASDAQ:AAPL) and Twenty-First Century Fox (NASDAQ:FOX) (NASDAQ:FOXA) stand out as particularly interesting potential investments right now. Here's why shares of these two companies make for compelling Buffett stocks to buy in April.
After first being purchased by one of his investing lieutenants in 2016, Buffett spearheaded Berkshire's recent doubling-down on Apple shares. In the past few months, the Oracle increased Berkshire's Apple investment to a stake worth nearly $20 billion. And although the move breaks with his long-standing aversion to technology companies, his purchase of the Mac maker is a classic Buffett investment in virtually every other sense.
I've gone to great lengths to argue the bull thesis for Apple shares in several articles as of late, so I won't provide as exhaustive of an analysis here as I might otherwise -- the accompanying links should more than get you up to speed. That said, Apple enjoys several useful catalysts that suggest its shares will continue to rise in the coming months.
Apple shares tend to handily outperform the broader market in the run up to major iPhone releases. With one-third of its estimated installed base using iPhones that are more than two years old, the stage again seems set for Apple to trigger a massive upgrade cycle with the release of its reportedly redesigned 10th anniversary iPhone this fall. Despite this likely return to growth, Apple remains far cheaper than the overall market. And its overflowing cash hoard gives Apple the ability to enhance its shareholder returns through any number of potential avenues.
Twenty-First Century Fox
Berkshire began buying shares of Twenty-First Century Fox in the fourth quarter of 2014. Berkshire's initial purchase totaled 4.75 million shares, worth $181 million at the end of the period. Berkshire has since nearly doubled its ownership stake, reporting control of 8.9 million shares in its latest 13-F, a stake of about $285 million in dollar terms.
The relatively small dollar values at work here, at lest for Berkshire, suggest that one of Buffett's two investing lieutenants initiated the position. Either way, the move reflects an increasing bullishness toward media assets from Berkshire, a perspective that's understandable judging by recent trends in the industry.
Consolidation has been a especially potent trend, as content producers like Twenty-First Century Fox have become acquisition targets. To this end, AT&T's pending buyout of Time Warner shows why Twenty-First Century Fox could find itself an acquisition target at some point soon.
Spurring this is the fact that media distribution channels are expected to shift as new wireless standards, such as 5G, allow for ultra-fast streaming over wireless networks directly to mobile devices. Doing so will likely require so-called "wireless bundle" providers like AT&T to negotiate for content deals with existing cable companies, like Comcast.
As such, the safest way to ensure a company like AT&T can secure rights to critical channels is to also own broadcast content that other cable providers need for their own bundles. In light of that, names like Charter Communications -- also a Berkshire holding -- or Verizon Communications could look to purchase Twenty-First Century Fox to continue this trend.
This highlights what makes Twenty-First Century Fox a suitable Buffett stock. The company's durable competitive advantage is its content assets and brands, which are difficult to replicate or challenge. Regardless of your politics, it's probably safe to say that it would be virtually impossible to challenge media assets like Fox News among its constituents. In this sense, Twenty-First Century Fox seems like a classic Buffet stock to invest in at a time when content assets are in high demand.
Andrew Tonner owns shares of Apple. The Motley Fool owns shares of and recommends Apple, Berkshire Hathaway (B shares), and Verizon Communications. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool recommends Time Warner. The Motley Fool has a disclosure policy.