When Berkshire Hathaway (BRK.A -0.03%) (BRK.B 0.07%) CEO Warren Buffett buys or sells stock, everyday and professional investors alike pay close attention. That's because the Oracle of Omaha, as he's come to be known, has vastly outperformed Wall Street's benchmark stock indexes since he became CEO in 1965.

According to Buffett's most recent letter to his company's shareholders, Berkshire Hathaway's Class A shares (BRK.A) are up 3,787,464%, compared to 24,708% for the S&P 500, including dividends paid, since he took over.

Warren Buffett at Berkshire Hathaway's annual shareholder meeting.

Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.

Riding Buffett's coattails has been a moneymaking proposition for decades -- and it's made all the easier thanks to Form 13F filings with the Securities and Exchange Commission, which allow investors a quarterly under-the-hood look at what he and his team have been buying and selling. Based on 13Fs and the company's quarterly operating results, there are three stocks Warren Buffett can't stop buying.

Occidental Petroleum

The first stock the Oracle of Omaha and his investment team simply can't stop buying is oil stock Occidental Petroleum (OXY -0.51%). In terms of common stock, Berkshire Hathaway owned no shares of Occidental Petroleum prior to the start of 2022. But since then, Buffett's company has acquired nearly 200.2 million shares.

The most logical reason for Buffett and his investing lieutenants, Ted Weschler and Todd Combs, to build up this stake is with the expectation that the price of crude oil will remain well above average for the foreseeable future. A number of factors suggest this thesis holds water.

For instance, Russia's invasion of Ukraine casts doubt on Europe's future energy supply needs. Additionally, the COVID-19 pandemic caused global energy companies to substantially pare back their capital expenditures for the past three years. Without sizable investments in drilling, exploration, pipelines, and refineries, it will be incredibly difficult to ramp up supply domestically and abroad.

The interesting thing about Occidental Petroleum compared to Chevron, Berkshire's third-largest holding by market value, is its revenue mix. Even though Occidental is an integrated operator, it generates the bulk of its revenue from drilling. If the macro factors described above do, indeed, support a sustainably higher price for crude oil, Occidental could benefit even more than Chevron. In other words, I believe Occidental Petroleum allows Buffett and his team to leverage their bet on higher crude prices.

Occidental Petroleum's balance sheet is also improving as a result of higher energy commodity prices. At the end of March 2021, the company had a ghastly $35.5 billion net debt. However, it closed out 2022 with $19.7 billion in net debt. With a more flexible balance sheet, Occidental's board OK'd a 38% dividend increase and a brand-new $3 billion share repurchase program.

Apple

A second stock Warren Buffett can't stop buying for his company's investment portfolio is tech giant Apple (AAPL 2.86%). Despite already being the largest holding in Berkshire Hathaway's portfolio by a significant amount (42.1% of invested assets), Buffett and his team have purchased 8,000,621 shares of Apple stock since 2022 began.

In Buffett's 2021 letter to shareholders, he described Apple as one of Berkshire's "Four Giants."  With Apple accounting for $140 billion of his company's $333 billion investment portfolio, this is a fair statement.

What stands out about the largest publicly traded company in the world is its incredible cash flow. Last year, Apple generated an almost unfathomable $109.2 billion in operating cash flow. This reflects the company's top-tier brand power, as well as the innovation it's used to drive sales growth for well over a decade.

On the one hand, Apple's physical products have long endeared consumers to its brand. It has controlled in the neighborhood of 50% of the U.S. smartphone market share since introducing a 5G-capable iPhone in late 2020. Apple also saw its U.S. share of the personal computer market soar to decade highs late last year.

But it's Apple's ongoing evolution to a services-driven operating model that should have shareholders excited. The company's newfound focus on subscription services will further enhance customer loyalty, boost operating margins, and help minimize revenue fluctuations common when Apple undergoes product replacement cycles with the iPhone.

However, Warren Buffett's favorite thing about Apple might just be its capital-return program. Aside from paying one of the highest nominal-dollar dividends each year (about $14.5 billion), Apple has returned in excess of $550 billion via share buybacks since the beginning of 2013. Excluding itself, the value of Apple's share repurchases over the past 10 years is more than 494 of the 499 S&P 500 companies. Thanks to these buybacks, Berkshire Hathaway can simply sit back and grow its stake in Apple without lifting a finger.

A person writing and circling the word buy beneath a drop in a stock chart.

Image source: Getty Images.

Berkshire Hathaway

Cue the plot twist! The third stock Warren Buffett absolutely can't stop buying is shares of his own company, Berkshire Hathaway.

Prior to July 2018, Warren Buffett and his trusted sidekick, executive vice chairman Charlie Munger, were only allowed to repurchase Berkshire stock if it fell to or below 120% of book value (i.e., no more than 20% above book value). For more than a half-decade leading up to July 2018, no buybacks were made because Berkshire Hathaway stock never fell to or below this required level.

In July 2018, the company's board passed new measures that gave its dynamic duo the freedom to buy back stock, so long as two criteria were met:

  • There must be at least $30 billion in cash, cash equivalents, and U.S. Treasuries on Berkshire Hathaway's balance sheet; and
  • Warren Buffett and Charlie Munger must agree that Berkshire Hathaway stock is trading below its intrinsic value.

With these conditions met, Buffett and Munger have had a field day green-lighting Class A (BRK.A) and Class B (BRK.B) share repurchases. In less than 4 1/2 years, they've overseen the repurchase of $66 billion in Berkshire stock.

The most obvious benefit of share repurchase activity for companies with steady or growing net income is that it can provide a positive lift to earnings per share. Over time, this can make a publicly traded company that much more attractive.

But make no mistake, buying $66 billion worth of Berkshire Hathaway stock is also Buffett's way of betting on himself and demonstrating to his shareholders that he has complete faith in the company's investment portfolio and roughly five dozen owned businesses. Since most of Berkshire's owned and invested assets are cyclical businesses, they're poised to grow in lockstep with the U.S. and global economy over the long run.