Do you trust proven investors like Warren Buffett? You should. His results speak for themselves, after all. Although it occasionally trails the broad market, over long enough periods, Buffett's Berkshire Hathaway consistently outperforms the S&P 500. It might be wise to occasionally poach one of his picks.
Here's a look at a handful of recent additions Buffett has made to Berkshire Hathaway's portfolio. They may be at home in your portfolio as well.
What Buffett's been buying of late
Funds like Berkshire Hathaway must disclose their holdings on a quarterly basis, so it's possible to keep tabs on the buys and sells Buffett and his team are making.
Except, Berkshire didn't make any noteworthy purchases during the most recently reported third quarter.
There were some Q3 additions to be sure. Buffett added shares of media outfit Liberty Live Group, and now owns a new stake Atlanta Braves Holdings as well. Berkshire also now owns a piece of Sirius XM Holdings.
None of those new positions, however, are significant or particularly bullish. Berkshire's holdings in Sirius and the Atlanta Braves are still relatively tiny, while its new share buy in Liberty is the result of a restructuring of its parent company and Sirius. Mostly, Buffett did a good deal of selling during Q3, growing Berkshire's cash hoard to a record-breaking $157 billion.
There are some recent purchases made by Berkshire Hathaway that you might want to buy as well, however. They were just made in the second quarter of 2023 and happened to survive Q3's culling. In no particular order...
Capital One
Credit card company Capital One Financial (COF +2.87%) has been a Berkshire holding since early last year. Despite just a so-so performance in the meantime -- paired with an uncertain future for the lender -- Buffett and his team of analysts saw fit to pick up another 2.5 million shares of the banking name during Q2. That brings the tally up to nearly 12.5 million.
Why buy a stock that is subject to above-average credit risk and a company that didn't exactly ace last year's so-called "stress test" administered by the Federal Reserve? It may be because Capital One is better shielded against a deteriorating credit market than it's getting credit for.
NYSE: COF
Key Data Points
See, although the company reports credit card delinquencies surpassed pre-pandemic levels in the third quarter of this year, as Gabelli Global Financial Services Fund manager Ian Lapey noted last year, the lender always has the option to "tighten its underwriting standards as it did in the early stages of the COVID-19 pandemic and during other recessions."
Capital One has been successfully adjusting its business to this end since the latter half of last year. That's a big reason the stock finally started performing in October.
Occidental Petroleum
Buffett's been a big, steady buyer of oil stocks of late. One of his favorites, though, has been Occidental Petroleum (OXY 5.42%). With Q2's purchase of another 12.4 million shares the conglomerate is now sitting on a 224 million share stake that makes up nearly 5% of Berkshire Hathaway's total equity portfolio.
It's a curious pick given oil's future. While consumers are clearly still using it, renewables will inevitably replace carbon-emitting crude eventually.
There's still plenty of good money to be made in the oil business though ... now, and for a long while. The International Energy Administration expects consumption of oil to continue growing through 2028, with demand likely to hold steady from that point at least through 2040. It's not too tough to figure out why Buffett's still on board with the stock.
Lennar
Last but not least, Berkshire took on a new 153,000-share stake in homebuilder Lennar (LEN.B +4.01%)(LEN +4.49%) during the second quarter of last year, and is still holding all of it.
It's another surprising pick given the seeming current state of the real estate market. Relatively high interest rates along with relatively high home prices have kept sales of new homes down since their 2020 peak, with new home transactions reaching multi-month lows (and approaching multiyear lows) as of the end of last year.
NYSE: LEN.B
Key Data Points
Buffett and Berkshire's other stock-pickers, however, arguably understand a very important premise about investing. That is, you own companies for where their underlying businesses are going rather than for where they've been. And with homebuilder confidence soaring for a second consecutive month in January due to easing interest rates, the real estate construction industry's turnaround may be taking shape sooner than expected.
And it's not just Lennar. Berkshire Hathaway purchased sizable pieces of homebuilders NVR and D.R. Horton during the second quarter of last year, too, underscoring the team's bullishness on homebuilding.
Just a starting point, but a good one
Simply because Warren Buffett recently bought and is sticking with a handful of stocks doesn't inherently mean they're perfect picks for your portfolio as well. Indeed, it's possible -- although not likely -- Berkshire Hathaway has since shed some or even all of these names. We won't know until the fourth quarter's disclosures are made public next month.
All the same, in light of Buffett's proven track record it certainly can't hurt to consider his recent picks as prospects for yourself even if they're only going to make up a small portion of your total holdings. He clearly sees something compelling enough with all of these companies to take a swing on them right now. It might be smart to take the hint.
