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These 5 Stocks Have Cost Buffett $49 Billion in 6 Weeks

By Sean Williams - Apr 2, 2020 at 6:07AM

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Not even a stock market crash can ruffle the Oracle of Omaha's feathers.

If you thought the financial crisis a little over a decade ago was bad, the coronavirus is rewriting history for Wall Street.

Growing uncertainty surrounding the coronavirus, which has led to more than 42,100 deaths globally as of March 31, wound up pulling the rug out from underneath the stock market at a record pace. It took just over three weeks for all major U.S. stock indexes to fall into bear market territory from their recent highs, with all major indexes shedding in excess of 30% in a little more than four weeks. Both descents represent the quickest 20% and 30% respective declines in the history of the U.S. stock market.

Berkshire Hathaway CEO Warren Buffett at this company's annual shareholder meeting.

Berkshire Hathaway CEO Warren Buffett at this company's annual shareholder meeting. Image source: The Motley Fool.

Think your losses are bad? Check out the billions Warren Buffett has lost

While the paper losses in your own personal portfolios have likely stung, they pale in comparison to the six-week decline Berkshire Hathaway (BRK.A -0.59%) (BRK.B -0.29%) CEO Warren Buffett has endured. Since the stock market peaked on Feb. 19, Berkshire Hathaway's portfolio has lost approximately $80 billion in value through the end of March.

Although the selling has been relatively indiscriminate to sector or industry, what's particularly notable about Buffett's paper losses over the past six weeks is that a sizable chunk ($49 billion) has come from only five stocks. Listed in order of total unrealized loss since Feb. 19, and taking into account any dividends paid, the following stocks have cost Buffett big time:

  • Apple (AAPL -0.14%): $17 billion in total value lost.
  • Bank of America (BAC 1.68%): $12.3 billion.
  • American Express (AXP 0.41%): $7.8 billion.
  • Coca-Cola (KO -0.46%): $6 billion.
  • Wells Fargo (WFC 2.31%): $5.9 billion.

Now, understand, there have been some notable negatives to come out of these companies. Apple was among the first to warn Wall Street that COVID-19 would disrupt its supply chain and cause it to miss its previous guidance. There have also been rumors that Apple might delay the launch of its first 5G-capable iPhone given the uncertainties surrounding the coronavirus, which has further pressured shares.

A one hundred dollar bill on fire atop a lit stove burner.

Image source: Getty Images.

Meanwhile, financials have taken a beating across the board -- which is especially bad news considering that financials are Buffett's largest sector-based holding. Financials are a cyclical sector, meaning they don't perform well when recessions crop up. Even more worrisome, the Federal Reserve lowered its federal funds rate back to a historically low range of 0% to 0.25%. This means less net interest income for Bank of America, Wells Fargo, and American Express.

Warren Buffett isn't panicking, and neither should you

However, this isn't the first time Buffett has navigated through a bear market. History has shown that he has used times of immense fear to make some of his most profitable investments. For instance, Buffett wound up taking a $5 billion preferred stake in Bank of America following the financial crisis, fueling what's become his second-largest position by dollar value. Even with $12.3 billion in recent paper losses, Buffett has made a boatload of money on Bank of America from his initial investment in the company many years ago.

Resolve is yet another reason the Oracle of Omaha has had such lasting success pushing through bear markets. Coca-Cola, Wells Fargo, and American Express are three names that Berkshire Hathaway has owned for approximately 31, 30, and 27 years, respectively. Though it may not be the case with Wells Fargo, which Buffett has sold down recently, he very much continues to hold on to Coca-Cola and American Express because he believes in their brands, their image, and their competitive advantages.

Two friends clanking their Coca-Cola bottles together while seated and chatting outside.

Image source: Coca-Cola.

Think about Coca-Cola as an example. It's a beverage giant that's operating in all but one country worldwide (North Korea), and it has 21 brands that generate at least $1 billion in annual sales. It's also one of the most recognizable brands in the entire world. Although COVID-19 has people staying home more, that's not going to compromise a consumer staple like Coca-Cola or alter its long-term growth strategy -- and Buffett knows it.

He's also a big-time fan of businesses that choose to take good care of their shareholders. That's why Apple currently accounts for a whopping 35% of Berkshire Hathaway's portfolio. Even with Apple taking on more than $100 billion in debt in recent years, much of which was used to fuel a massive share repurchase program, Buffett has been entirely on board with management's decision-making. After all, borrowing rates have been at or near historic lows (something even Buffett has taken advantage of),  and Apple has had little issue generating significant cash flow from its traditional iPhone segment and its faster-growing wearables and service operations.

The point is that if Buffett can shrug off an $80 billion loss in six weeks, you, too, can look past what might be an unsightly paper loss since Feb. 19. Buffett's resolve to stay the course has resulted in a 2,744,062% gain in per-share market value for Berkshire Hathaway over the past 55 years, which should be more than enough to encourage you to have some faith in your own long-term investments.

Sean Williams owns shares of Bank of America. The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short June 2020 $205 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$165.35 (-0.14%) $0.23
Bank of America Corporation Stock Quote
Bank of America Corporation
$33.96 (1.68%) $0.56
The Coca-Cola Company Stock Quote
The Coca-Cola Company
$63.38 (-0.46%) $0.29
Wells Fargo & Company Stock Quote
Wells Fargo & Company
$43.76 (2.31%) $0.99
American Express Company Stock Quote
American Express Company
$157.51 (0.41%) $0.64
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
$439,528.92 (-0.59%) $-2,620.08
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
$292.07 (-0.29%) $0.84

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

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