Warren Buffett doesn't follow the crowd. He never has. You could make a strong argument that it's paid off for him through the years. After all, Buffett is one of the wealthiest people on the planet, as well as one of the most famous investors ever.
It's not hard to find current examples of the Oracle of Omaha's independent streak. These seven stocks show how Buffett is zigging while most investors zag.
What banking crisis?
Buffett had already trimmed Berkshire Hathaway's (BRK.A +1.33%) (BRK.B +1.16%) positions in several bank stocks before 2023 began. But when most investors ran for the hills during the banking crisis, Buffett saw an opportunity.
In the first quarter of 2023, the legendary investor scooped up more shares of Bank of America (BAC +0.47%). The big bank is the second-largest holding in Berkshire's portfolio. Buffett also initiated a new position in Capital One Financial (COF 0.86%). In Q2, he added to that stake.
NYSE: COF
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Could there be more problems for banks? Sure. However, Buffett no doubt recognizes that Bank of America and Capital One are financially strong. Both companies have solid balance sheets. Both reported good earnings growth in the second quarter of 2023.
Buffett also knows that these two bank stocks are valued attractively compared to their future earnings potential. That's especially the case for Capital One, with its shares trading at a forward earnings multiple of under 7.4x.
Boring is beautiful
Many investors have hopped on the artificial intelligence (AI) bandwagon this year. AI stocks including Nvidia and Meta Platforms have skyrocketed.
Buffett hasn't added a single share of any stock that's benefited from the AI boom, though. Instead, he invested more heavily in five stocks that some would consider downright boring: Itochu (ITOCF 5.75%) (ITOCY +0.75%), Marubeni (MARUY +1.82%) (MARUF 2.26%), Mitsubishi (MSBHF +0.03%), Mitsui (MITSF +8.17%), and Sumitomo (SSUM.Y +0.77%).
OTC: ITOCF
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It's probably fair to say that most U.S. investors are unfamiliar with several, if not all, of those stocks. None of the stocks trade on U.S. exchanges. They're all Japanese trading houses (sogo shosha), some with roots that date back to the 17th century.
What does Buffett like about these five stocks? For one thing, their business models are highly diversified, much like Berkshire Hathaway's. The Japanese companies are conglomerates involved in a wide range of industries.
Unsurprisingly, Buffett also likes their valuations. He told CNBC in April 2023 that the stocks "were selling at what I thought was a ridiculous price."
Buffett's biggest zig right now
There's one other way that Buffett is zigging while most investors zag. And it's arguably his biggest zig of all right now.
Buffett has provided lots of memorable quotes through the years. Among his most famous is this one: "Be fearful when others are greedy, and greedy when others are fearful." With the S&P 500 up by a double-digit percentage this year, some investors have likely been greedy -- at least until the recent market pullback. Buffett, on the other hand, could be described as more in the fearful camp these days.
In both the first and second quarters of 2023, the legendary investor was a net seller of stocks. Sure, Buffett has bought a few attractively valued stocks (notably including the seven discussed above). However, his biggest investment of all hasn't been a stock; it's been U.S. Treasurys.
You can bet, though, that when most investors are again scared away from the stock market, Buffett will be there to buy stocks on the cheap. He loves to zag when others zig, too.
