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3 Warren Buffett Picks That Most Investors Missed

By Dan Caplinger - Updated Jan 31, 2020 at 9:24AM

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Even many Buffett followers haven't picked up on some of these winners. Did you?

Warren Buffett is one of the most successful investors of all time, and he's attracted a monumental following in the investing community. Many people follow Buffett's every move closely, something that's a lot easier to do because Berkshire Hathaway's is obligated to make regulatory disclosures of its stock portfolio.

Most Buffett watchers are familiar with top Berkshire stock holdings like Apple and Kraft Heinz, given the tens of billions of dollars that the Oracle of Omaha has invested in their shares. But lurking under the radar are some smaller holdings that don't get as much attention -- even though they're promising enough to have found their way onto Buffett's buy list. Let's take a closer look at three stocks that you might not even realize were among Buffett's picks.


StoneCo (STNE -1.51%) hasn't been in the Berkshire stock portfolio for very long, and it represented a massive departure for Buffett's company as Berkshire ended up investing in StoneCo's initial public offering in late 2018. That's not something Buffett has done very often, and in fact, most of those watching Berkshire believe that investment manager Todd Combs was largely responsible for making the pick.

Warren Buffett in front of several other people.

Image source: The Motley Fool.

StoneCo has become a notable player in the payment processing business, serving the Brazilian market with financial services that include point-of-sale terminals for hundreds of thousands of local merchants. With larger bets on U.S. payment giants Visa and Mastercard, Berkshire's roughly $600 million position in StoneCo might not seem to be a big deal. But the holding represents a 5% stake in StoneCo. If the Brazilian economy performs well and if StoneCo can expand successfully across the region, then investors could see even bigger gains than the nearly 80% boost in the financial technology company's stock price over the past year.

Axalta Coating Systems

Many of Buffett's picks are in relatively quiet corners of the market, as that's where you'll typically find the best opportunities to discover stocks with hidden value. Axalta Coating Systems (AXTA -1.17%) is a good example of this, as the company's focus is on making paint and specialty coatings with protective qualities. Axalta has a significant presence in the auto and truck market, exposing its business to the typical cyclical ups and downs that many auto suppliers face.

Axalta itself understands that it's underappreciated, and that's one motivation for its decision last year once again to seek strategic alternatives that could include a sale of the business or certain divisions. Berkshire's $700 million holding in Axalta is about 10% of the company, and that'd put Buffett in an especially good position to profit from a sale. However, the ongoing search makes it tricky for those looking to invest in Axalta directly, and waning hopes that the company will find a buyer have sent the share price down to start 2020.

Globe Life

Globe Life (GL -0.20%) might seem like a new name to Buffett watchers, but some will be more familiar with the insurance company under its previous moniker. Globe Life changed its name from Torchmark in August, seeking to make it clear that the company aims to be a leader in the insurance industry. Globe's focus is on life and supplemental health insurance, with products specifically designed to provide different types of financial protection for millions of families.

Buffett's holding in Globe Life amounts to more than $660 million, or just shy of a 6% stake in the company. Berkshire's interest in Globe dates back for decades, so it's likely that the insurance provider will remain in Buffett's portfolio with his typical hold-forever mentality guiding the holding.

What you can learn from Buffett's holdings

It's easy to understand why Warren Buffett invests in giants like Apple, but you can learn a lot from looking at what motivates lesser-followed holdings like these three stocks. Buffett's portfolio reflects many different factors that go into his decision-making process on which stocks to buy. By recognizing those factors and applying them to your own portfolio, you can learn from Buffett's process and improve your own investing results.

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Stocks Mentioned

Globe Life Inc. Stock Quote
Globe Life Inc.
$97.34 (-0.20%) $0.20
Axalta Coating Systems Ltd. Stock Quote
Axalta Coating Systems Ltd.
$22.43 (-1.17%) $0.27
StoneCo Ltd. Stock Quote
StoneCo Ltd.
$8.15 (-1.51%) $0.12
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
$410,558.99 (-0.79%) $-3,285.11
Apple Inc. Stock Quote
Apple Inc.
$141.77 (0.15%) $0.21
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
$273.31 (-0.86%) $-2.38
Kraft Heinz Intermediate Corporation II Stock Quote
Kraft Heinz Intermediate Corporation II
$38.01 (-0.29%) $0.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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