In this piece, we will take a look at the stocks that both Warren Buffett and insiders love. If you want to skip our introduction to Warren Buffett, his latest portfolio changes, and his firm, then take a look at Warren Buffett and Corporate Insiders Love These Stocks: Top 5 Stocks.
For anyone who even briefly follows the stock market, Warren Buffett is no stranger. His success in the stock market and the ability to pick out a handful of stocks among the thousands that change hands daily has made Mr. Buffett one of the richest people in the world. He makes his investments through the financial holding company Berkshire Hathaway. Berkshire's investments are not limited only to publicly traded companies. Instead, the firm also owns private businesses, and every quarter, it generates revenue from these investments.
The nature of Berkshire's income statements makes it necessary for the firm to take out sizeable stakes in at least some stocks that are part of its portfolio. This is because since Berkshire is not a hedge fund, it does not engage in traditional trading strategies such as leveraged puts or calls. Neither does it buy stocks simply to sell them later at a higher price. Instead, Berkshire's business model works by first investing in businesses that are revenue generators themselves, or sizeable and well established companies that can pay out dividends.
Berkshire Hathaway's investors have such a high amount of faith in Mr. Buffett and Charlie Munger that despite the fact that none of the dividends that are paid to Berkshire are paid to the shareholders, they continue to invest in the company. The dividends that Berkshire receives are sizeable too. Its financial statements show that during the first three quarters of 2023, Berkshire earned $4 billion through dividends, interest, and other income. In fact, two of Berkshire's biggest investments during the third quarter, namely the 915 million shares that it owns of Apple Inc. (NASDAQ:AAPL) and the 1 billion shares of Bank of America Corporation (NYSE:BAC) led to nearly half a billion dollars of dividends being paid to Mr. Buffett's investment firm in a quarter.
Safe to say, trust is a central element in Warren Buffett's business model. Berkshire's investors believe that he and Mr. Munger can invest their money better than they would be able to do so. Therefore, they primarily derive value from their investment through the shares of Berkshire Hathaway relative to the U.S. dollar. A sound investment strategy contributes to share price appreciation at percentage levels that are greater than bonds, the broader market, or other financial instruments can offer. As an illustration, consider the share price returns of Berkshire Hathaway Inc. (NYSE:BRK-A) and Berkshire Hathaway Inc. (NYSE:BRK-B). Over the past five years, a turbulent time period that has seen significant volatility in the stock market through a pandemic and then global geopolitical conflict, the S&P 500 index has gained 72.74%. The classes of Berkshire's shares, namely Class A and Class B, have gained 76.53% and 74.50%, respectively. This makes it clear that Berkshire's investors can do well even during stock market black swan events, and that the businesses that Mr. Buffett and his peers invest in end up performing better than a broader collection of stocks.
Large investment conglomerates and hedge funds don't simply invest in companies through their gut feelings. A large portion of their investment decisions are based on meetings with company management to gain a deeper understanding of the business model while not violating any insider trading laws. This is partly why professional investors are trusted by their clients, as their business insights often constitute advanced market signals that can contribute to broader share price appreciation down the road.
Before we get to the stocks that both Warren Buffett and corporate insiders love, a brief look at the latest investment decisions by Berkshire is also important. During the third quarter, Berkshire increased its investments in The Liberty SiriusXM Group (NASDAQ:LSXMA) by buying roughly $2 billion worth of additional shares. Additionally, the firm also bought $7.9 million worth of shares of the holding company for the baseball company Atlanta Braves, Atlanta Braves Holdings, Inc. (NASDAQ:BATRA). The third quarter was also noted for Berkshire's unloading of a lot of big ticket names such as Johnson & Johnson (NYSE:JNJ), General Motors Company (NYSE:GM), and United Parcel Service, Inc. (NYSE:UPS).
So, which stocks have been on the radar of both Warren Buffett and insiders as the stock market adjusts to a new interest rate era? We took a look and some notable picks are Markel Group Inc. (NYSE:MKL), The Liberty SiriusXM Group (NASDAQ:LSXMA), and Liberty Latin America Ltd. (NASDAQ:LILA).
To compile our list of the stocks that Warren Buffett and corporate insiders are buying, we ranked the stocks in Berkshire's third quarter investment portfolio by the dollar value of insider purchases over the past twelve months. Out of these, the top 11 stocks were chosen.
Warren Buffett and Corporate Insiders Love These Stocks
11. Amazon.com, Inc. (NASDAQ:AMZN)
Berkshire Hathaway's Q3 2023 Investment Value: $10.9 billion
Insider Purchases: $114
Average Share Price: $114
Amazon.com, Inc. (NASDAQ:AMZN) is a mega cap technology giant with sizeable electronic commerce and cloud computing businesses. Its only insider purchase over the past 12 months has been a single share bought by founder Jeff Bezos in May 2023. Since then, the stock has gained $32.
By Q2 2023 end, 278 out of the 910 hedge funds part of Insider Monkey's database had held a stake in Amazon.com, Inc. (NASDAQ:AMZN). During Q3, the firm's biggest hedge fund investor was Ken Fisher's Fisher Asset Management as it owned 41 shares that were worth $5.2 billion.
Along with The Liberty SiriusXM Group (NASDAQ:LSXMA), Markel Group Inc. (NYSE:MKL), and Liberty Latin America Ltd. (NASDAQ:LILA), Amazon.com, Inc. (NASDAQ:AMZN) is a stock much loved by Warren Buffett and insiders.
10. American Express Company (NYSE:AXP)
Berkshire Hathaway's Q3 2023 Investment Value: $22.6 billion
Insider Purchases: $143,930
Average Share Price: $143.93
American Express Company (NYSE:AXP) is one of Warren Buffett's oldest investments as he first started profiting from the stock in the 1960s. Its director Walter Clayton bought 100,000 shares in October 2023. A weak consumer environment coupled with high rates has led to a mixed bag of performance by American Express Company (NYSE:AXP) lately as the firm has beaten analyst EPS estimates in two out of its four latest quarters.
During this year's June quarter, 73 out of the 910 hedge funds profiled by Insider Monkey were the firm's investors. American Express Company (NYSE:AXP)'s largest hedge fund shareholder in the September quarter was Warren Buffett's Berkshire Hathaway due to its $22.6 billion investment.
9. Aon plc (NYSE:AON)
Berkshire Hathaway's Q3 2023 Investment Value: $1.3 billion
Insider Purchases: $259,660
Average Share Price: $324.58
Aon plc (NYSE:AON) is an Ireland based financial services firm that offers insurance, coverage planning, and other services. Its only recent insider purchase came through director Byron Spruell buying $259,660 worth of shares in the third quarter at an average share price of $324.58.
During the previous quarter, 41 out of the 910 hedge funds surveyed by Insider Monkey had held a stake in Aon plc (NYSE:AON). In the following quarter, Warren Buffett's Berkshire Hathaway was the biggest stakeholder as it owned $1.3 billion worth of shares.
8. Snowflake Inc. (NYSE:SNOW)
Berkshire Hathaway's Q3 2023 Investment Value: $935 million
Insider Purchases: $299,917
Average Share Price: $163.80
Snowflake Inc. (NYSE:SNOW) is a cloud computing company that provides data collection and analysis products and services. Its director Mark D. McLaughlin bought 1,831 shares for $299,917 during May 2023. The ongoing strength in enterprise computing and the buzz around AI has served the firm well as it has beaten analyst EPS estimates in all four of its latest quarters.
Insider Monkey dug through 910 hedge funds for their second quarter of 2023 shareholdings and found that 65 had invested in the firm. Snowflake Inc. (NYSE:SNOW)'s biggest hedge fund stakeholder in Q3 was Brad Gerstner's Altimeter Capital Management since it held a $2.3 billion stake that came via 15 million shares.
7. Mastercard Incorporated (NYSE:MA)
Berkshire Hathaway's Q3 2023 Investment Value: $1.5 billion
Insider Purchases: $390,960
Average Share Price: $390.96
Mastercard Incorporated (NYSE:MA) is a financial products and services provider best known for its plastic cards issued in partnership with banks. It's one of the best rated stocks on our list since analysts have set an average share rating of Strong Buy and an average share price target of $409.45.
As of June 2023 end, 139 out of the 910 hedge funds tracked by Insider Monkey had bought and owned Mastercard Incorporated (NYSE:MA)'s shares. During September 2023, the largest investor was Charles Akre's Akre Capital Management due to its $2.3 billion investment.
6. Atlanta Braves Holdings, Inc. (NASDAQ:BATRA)
Berkshire Hathaway's Q3 2023 Investment Value: $7.9 million
Insider Purchases: $421,167
Average Share Price: $36.45
Atlanta Braves Holdings, Inc. (NASDAQ:BATRA) is the holding company for the baseball team Atlanta Braves. It also owns other entertainment and associated assets. Gamco Investors has been the firm's only insider buyer since November last year and it has bought $421,167 worth of shares.
10 out of the 910 hedge funds part of Insider Monkey's Q2 2023 database were Atlanta Braves Holdings, Inc. (NASDAQ:BATRA)'s investors. It joins Markel Group Inc. (NYSE:MKL), The Liberty SiriusXM Group (NASDAQ:LSXMA), and Liberty Latin America Ltd. (NASDAQ:LILA) in our list of top Warren Buffett stocks with insider buying.
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Disclosure: None. Warren Buffett and Corporate Insiders Love These Stocks is originally published on Insider Monkey.