Berkshire Hathaway's (BRK.A -0.30%) (BRK.B -0.26%) CEO Warren Buffett and Vice Chairman Charlie Munger have been critical in the past of the popular online commission-free brokerage Robinhood Markets (HOOD -1.10%). At Berkshire's annual meeting in early 2021, Buffett said the popularity of the platform was "a very significant part of the casino aspect" that fueled the market last year.
But for all of that criticism, Berkshire in recent years has been buying several of the same stocks that are among Robinhood users' 100 most popular holdings. And Berkshire hasn't just been making small purchases, it's been buying these stocks hand over fist. That suggests not all Robinhood users are necessarily gambling with their picks. Let's take a look at three stocks popular with Buffett and with Robinhood account holders.
1. Apple
The consumer tech giant Apple (AAPL 0.52%) is the second-most commonly held stock by Robinhood users, according to the site. It also happens to be the largest position in Berkshire's portfolio by far, making up more than 42% of the company's roughly $363 billion equities portfolio.
Berkshire in the second quarter of this year purchased another 3.9 million shares of Apple and at the end of the quarter owned 894.8 million shares, which are currently valued at close to $150 billion. That gives Berkshire a nearly 5.6% stake in the company.
One of the reasons Buffett likes Apple is because of its extraordinary brand power, which gives it the ability to pass higher costs associated with making products onto its customer base without too much pushback. This makes Apple unique because it's a growth tech stock that can also hedge inflation to a certain extent. Apple's stock is only down about 4.7% this year, which compares favorably to the Nasdaq Composite, which is down nearly 19.8% this year. The company also continues to buy back a ton of stock, which we know Buffett and Berkshire love.
2. Bank of America
Bank stocks are not exactly popular among retail traders but further down on Robinhood's list of popular stocks is the second-largest bank in the U.S., Bank of America (BAC -1.07%). During the early months of the pandemic, as Berkshire was selling many of its large bank stocks, the conglomerate plowed more than $2 billion into Bank of America in 12 days.
Clearly, Buffett is happy with how CEO Brian Moynihan has turned the bank around following its struggles during the Great Recession. Berkshire now owns more than 1 billion shares of Bank of America, which are currently valued at more than $34.8 billion. Bank of America now makes up almost 10% of Berkshire's portfolio.
Bank of America has amassed a very large and sticky deposit base. Coupled with its large commercial lending portfolio, the bank is one of the largest beneficiaries of rising interest rates in the industry. Net interest income, the profit banks make on loans after funding those assets, has already begun to rise significantly and is expected to take off in the back half of this year, as well as in 2023, as the Federal Reserve continues to aggressively hike its benchmark overnight lending rate.
3. Berkshire Hathaway
Although it's lower on the list, Berkshire Hathaway also made Robinhood's list, and that's right, Berkshire has been buying up a lot of itself through share repurchases in recent years, signaling to the market that the company thinks it's undervalued.
While the company struggled to find stocks it wanted to invest in 2021, as the market was climbing at a rapid pace, Berkshire plowed $27 billion into share repurchases. Those have continued this year, although at a far slower rate, as Berkshire has returned to buying stocks after the market suffered the worst first half of the year in 2022 in five decades.
It turns out Buffett and Berkshire made the right decision. Class A shares of Berkshire are only down 2.7% this year, compared to the S&P 500, which is down nearly 13.7%. Berkshire owns a lot of different businesses, including insurance, railroads, mortgages, and energy that investors have found more stable and appealing during the intense market volatility.
