Which stocks does Warren Buffett like the most? Obviously, Berkshire Hathaway (BRK.A -0.28%) (BRK.B -0.68%) deserves to be at the top of the list. Most of Buffett's personal net worth is invested in the company.
There's also a good case to be made that Apple (AAPL 1.27%), Bank of America (BAC -0.13%), and Chevron (CVX 0.44%) should be on the list of Buffett's favorite stocks. If you look at Berkshire's regulatory filings, they rank as the conglomerate's top three holdings. But those filings don't tell the full story.
Image source: The Motley Fool.
Why Buffett likes these stocks
Let's first look at Berkshire's latest regulatory filings listing its holdings. Here's what the company's positions were in the three biggest stocks as of Dec. 31, 2022:
| Stock | Shares Owned | Value |
|---|---|---|
| Apple | 895,136,175 | $116.3 billion |
| Bank of America | 1,010,100,606 | $33.5 billion |
| Chevron | 162,975,771 | $29.3 billion |
Data source: Berkshire Hathaway 13F filing.
With such huge stakes, Buffett clearly likes Apple, Bank of America, and Chevron. Why? The legendary investor has his reasons.
Buffett didn't initiate a position in Apple until 2016. Since then, he has often sung the company's praises. In an interview with CNBC in 2020, Buffett said that Apple was "probably the best business I know in the world."
He still loves the business. Apple was one of only four stocks that he bought for Berkshire's portfolio in the fourth quarter of 2022.
Bank stocks have been near and dear to Buffett's heart for years. Sure, he has cut back on his positions in several of these stocks in recent quarters. However, he has held onto Bank of America -- probably because it remains one of the strongest and most innovative big banks around.
Buffett also became enthusiastic about Chevron in 2020. Shares of the giant oil and gas producer had been beaten down because of the COVID-19 pandemic. Buffett saw a great opportunity and initiated a huge position in the stock.
Extra shares for Buffett's big three
Buffett actually owns even more of Apple, Bank of America, and Chevron than you might think. How? Berkshire Hathaway has a subsidiary, New England Asset Management (NEAM), that's an investment firm.
NEAM has its own portfolio, which includes all three of Berkshire's biggest holdings. At the end of 2022, NEAM's positions in Buffett's big three were:
| Stock | Shares Owned | Value |
|---|---|---|
| Apple | 20,446,491 | $2.7 billion |
| Bank of America | 22,760,835 | $764.5 million |
| Chevron | 4,429,265 | $795 million |
Data source: New England Asset Management 13F filing.
With these extra shares added, Apple makes up 43.7% of Berkshire's total portfolio. Bank of America and Chevron comprise 8.9% and 8.1%, respectively, of the conglomerate's portfolio.
There's also a way that Buffett and Berkshire indirectly own even more shares of Apple. Berkshire initiated a position in Markel (MKL -1.17%) last year and now owns 3.5% of the company. As of Dec. 31, 2022, Markel owned a little over 1.2 million shares of Apple, which were worth around $156.8 million.
Another twist
If we dig further, there's another twist. Guess which stock is Markel's biggest holding? It's none other than Berkshire Hathaway. At the end of last year, Markel owned 1,114 Berkshire class A shares and more than 1.5 million Berkshire class B shares.
Because of Berkshire's stake in Markel, the conglomerate indirectly owns more of its own stock. That means, in turn, that it (and Buffett) own more of Apple, Bank of America, and Chevron.
Buffett's ownership of his top three stocks is certainly more complicated than meets the eye at first glance. But he owns the stocks for a simple reason: He expects them to deliver market-beating returns. I suspect that they will.
