There's probably not an investor on the planet who's more closely followed by Wall Street than Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) CEO Warren Buffett. That's because his long-term track record is unmatched.
Beginning with roughly $10,000 in seed capital in the mid-1950s, Buffett has bolstered his net worth to around $89 billion, which doesn't include the tens of billions of dollars he's donated to charity over the years. Berkshire Hathaway, which has acquired around five dozen companies and is currently invested in 48 securities, has also created more than $400 billion in shareholder value for investors over the years.
Suffice it to say that when Buffett buys a stock, Wall Street pays attention. According to Berkshire Hathaway's 13-F filings, Buffett bought the following nine stocks in 2019.
Easily the biggest eye-opener was Berkshire's purchase of Amazon (NASDAQ:AMZN) stock during the first and second quarters last year. Buffett has regretted overlooking Amazon's dominant business model, which may have been responsible for around 38% of all e-commerce sales in the U.S., per eMarketer.
Interestingly, though, Amazon's e-commerce and Prime membership may not be the leading driver for this company moving forward. Cloud-service provider Amazon Web Services (AWS) is growing at a much faster pace than e-commerce and is responsible for substantially higher margins than traditional retail sales. In other words, Amazon's future looks to be tied to AWS and not its online retail empire.
2. JPMorgan Chase
Considering that financials comprise close to half of Buffett's portfolio holdings in terms of invested assets, it really shouldn't be a surprise that the Oracle of Omaha chose to add to Berkshire's position in JPMorgan Chase (NYSE:JPM) during the first quarter. JPMorgan Chase has consistently been among the best money-center banks with regard to return on assets and return on equity, and Buffett tends to be a big fan of cyclical companies that are absolute cash machines. Buffett has even gone so far as to note that he keeps up on the happenings within the banking industry by reading JPMorgan CEO Jamie Dimon's annual letter to shareholders.
3. PNC Financial Services
PNC Financial, which is a relatively recent addition to Berkshire's portfolio, generated $1.4 billion in net income on $4.5 billion in total revenue in the third quarter, all while returning $1.5 billion to shareholders through regular buybacks and a healthy dividend. Everything seemed to work as planned -- average deposits and average loans rose 2% and 1%, respectively, while nonperforming assets decreased slightly -- and now, Buffett can simply sit back and watch his investment dollars go to work.
4. Delta Air Lines
Buffett piled into the airline industry during the second-half of 2016 and got even more aggressive with Delta Air Lines (NYSE:DAL) during the first quarter. Berkshire Hathaway added more than 5 million shares to its existing position.
Delta is lugging around far less net debt than key competitor American Airlines Group and has clearly benefited from West Texas Intermediate crude prices remaining in the $50s. A big stickler for value, Buffett is obviously still attracted to Delta's minuscule forward price-to-earnings ratio of just 8.
5. Red Hat
In both the first and second quarters, Berkshire Hathaway purchased stock in Red Hat, which was officially acquired by tech bellwether IBM (NYSE:IBM) on July 9 for $34 billion in an all-cash deal. IBM was late to the cloud-computing party and has seen sales from its legacy operations decline in nearly every quarter over the past six years. IBM's acquisition of Red Hat is designed to help narrow that gap. But having been burned by IBM before, Buffett was more than happy to take the cash and walk away.
6. Bank of America
File this under the "we're not surprised" tab, but Buffett purchased Bank of America (NYSE:BAC) stock on more than one occasion in 2019, adding to Berkshire's existing holdings. Bank of America is Berkshire's second-largest holding by market value and, like JPMorgan Chase, has been firing on all cylinders of late.
BofA has delivered substantive cost cuts by closing physical branches and focusing on digital banking. The company has also raised its quarterly payout back to $0.18 per quarter from the $0.01 per share it was paying out as recently as 2014. Bank of America has plans to return up to $37 billion to investors through dividends and buybacks over the course of the next year (as of late June 2019).
7. US Bancorp
I know... shocker! Buffett bought more bank stocks. US Bancorp (NYSE:USB) has been a particularly sweet long-term holding for the Oracle of Omaha, given that it largely avoided the risky derivatives and toxic investments that sacked major money-center banks during the Great Recession. This is why US Bancorp's return on assets has consistently outpaced the industry over the past decade. This is a bank that's not doing anything fancy but still manages to grow average total loans and deposits by a low-to-mid single-digit percentage year after year.
Another head-turner was the initiation of a position in RH (NYSE:RH), formerly Restoration Hardware, during the third quarter. What's unique about this purchase is that Buffett traditionally buys stakes in large, brand-name businesses with huge reach -- and RH doesn't fit the mold. This is a company selling higher-priced and oversized furniture and is primarily doing so by spurning online sales in favor of large paper catalogs.
Investors certainly can't argue with the results, as RH saw adjusted net sales grow 6% in the third quarter, with year-to-date free cash flow rocketing to $234 million from just $19 million last year. Still, with the U.S. economy likely in the later innings of its economic expansion, this purchase is a bit baffling.
9. Occidental Petroleum
Last but not least, Buffett opened a new position in Occidental Petroleum (NYSE:OXY) during the third quarter. Although Buffett doesn't devote a lot of his investments to the oil and gas sector, this move shouldn't be all that surprising. After all, Buffett committed to invest $10 billion in Occidental in late April to help with its acquisition of Anadarko. This investment was a bet on higher long-term oil prices, according to the Oracle of Omaha in an interview with CNBC's Becky Quick.
Now the question is: What will Buffett be buying in 2020?