Buffett's High Conviction Investments: Performance Review

by: Zvi Bar
There are literally thousands of equities and funds (of the mutual, closed-end and exchange traded varieties) for an investor to consider. As time goes on, more and more are turning out to be misunderstood, dangerous, poorly managed and/or a host of other issues. A prudent method of limiting the vast universe of potential investments may be to consider the investment decisions made by one or a few of the more respected investors within the market.
Warren Buffett is considered one of the best long-term investors out there and Berkshire Hathaway (NYSE:BRK.A) holds several large positions in well-known American companies. Additionally, most of his publicly traded investments have above-average dividends and a history of growing them over time.
Below are Warren Buffett's largest equity investments according Berkshire Hathaway’s latest 13F filing. I have only listed those positions valued at over $2 billion, indicating Warren Buffett feels relatively comfortable with the future prospects for these investments. I have also provided their present yield as well as their 5-day, 1-month and 2011-to-date performance rates.
Coca-Cola Co (NYSE:KO)
  • Yield: 2.8%
  • 5-day: -5.34%
  • 1-month: -0.81%
  • 2011-to-date: 2.50%
Wells Fargo & Co. (NYSE:WFC)
  • Yield: 2.1%
  • 5-day: -5.04%
  • 1-month: -4.32%
  • 2011-to-date: -24.08%
American Express (NYSE:AXP)
  • Yield: 1.5%
  • 5-day: -7.32%
  • 1-month: -3.41%
  • 2011-to-date: 7.90%
Procter & Gamble (NYSE:PG)
  • Yield: 3.4%
  • 5-day: -4.79%
  • 1-month: -2.04%
  • 2011-to-date: -5.29%
Kraft Foods (KFT)
  • Yield: 3.4%
  • 5-day: -3.81%
  • 1-month: 0.33%
  • 2011-to-date: 6.67%
Johnson & Johnson (NYSE:JNJ)
  • Yield: 3.7%
  • 5-day: -4.63%
  • 1-month: -4.58%
  • 2011-to-date: -0.55%
Wal-Mart (NYSE:WMT)
  • Yield: 2.9%
  • 5-day: -3.5%
  • 1-month: -3.60%
  • 2011-to-date: -5.16%
Most of these stocks have acted somewhat resiliently this year and through the recent sell-off, with the exception of Wells Fargo that lost about a quarter of its value since the start of 2011. Berkshire's other large financial holding, American Express, is actually the listed stock with the greatest capital appreciation so far in 2011, even though it is also the one with the worst performance during last week's sell-off. Below is a chart of the group's 2011-to-date performance [click to enlarge]:

Additionally, though the equity of most of these companies has depreciated so far in 2011, all but Wells Fargo have outperformed the S&P 500, which is down about 9.6% over the same term. Further, most of these equities have a greater yield than the S&P 500, with the sole exception being American Express, whose equity appreciated almost 8% so far this year (even after losing over 7% last week).

Further, these companies tend to grow their dividends, which is something Warren Buffett and other investors tend to appreciate. Many less professional individual investors may also appreciate that these companies are familiar to them. Most Americans, even if investing novices, are likely familiar with most or all of these companies. This familiarity often makes it easier to understand the businesses, and also makes information on the companies more readily available and frequently discussed.
Disclaimer: This article is intended to be informative and should not be construed as personalized advice as it does not take into account your specific situation or objectives.

Disclosure: I am long KFT.