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Warren Buffett’s Top 10 Stock Picks

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·8 min read
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In this article, we discuss Warren Buffett's top 10 stock picks. If you want to skip our detailed analysis of these stocks, go directly to Warren Buffett's Top 5 Stock Picks.

Warren Buffett, the 91-year-old fund manager of Berkshire Hathaway, is one of the most-watched investors in the world. The legendary investor is the brain behind the $294.4 billion portfolio of Berkshire Hathaway, which has averaged a 20% annual return. The billionaire investor is well-known for finding undervalued equities that have a solid business foundation, little or no debt, and have a competitive yet sustainable profit margin. The Oracle of Omaha is one of the world's richest individuals, with a personal net worth of $101 billion.

Some of the top stocks in Berkshire Hathaway's portfolio in Q3 2021 included Apple Inc. (NASDAQ:AAPL), Bank of America Corporation (NYSE:BAC), American Express Company (NYSE:AXP), and The Coca-Cola Company (NYSE:KO). Berkshire Hathaway's top ten holdings remained unchanged in the third quarter, according to 13F filings tracked by Insider Monkey, with the exception of reduced stakes in U.S. Bancorp (NYSE:USB).

Our Methodology

In this article, we will take a look at Berkshire Hathaway's top ten holdings as of the third quarter of 2021. We selected stocks that accounted for the biggest portion of the portfolio of Warren Buffett.

We used data from 867 hedge funds tracked by Insider Monkey to rank the stocks on our list.

With this context in mind, here's our list of Warren Buffett's top 10 stock picks.

Warren Buffett's Top 10 Stock Picks

10. The Bank of New York Mellon Corporation (NYSE:BK)

Percentage of Berkshire Hathaway's 13F Portfolio: 1.27%

Berkshire Hathaway's Stake Value: $3,751,012,000

Number of Hedge Fund Holders: 46

The Bank of New York Mellon Corporation (NYSE:BK) is one of the most valuable holdings in Warren Buffett's portfolio with 72.3 million shares worth $3.75 billion as of the end of the September quarter. The banking firm offers investment, wealth management, and insurance services.

Year to date, The Bank of New York Mellon Corporation (NYSE:BK) shares increased 36%. The company's revenue in the third quarter came in at $4.04 billion, an increase of 5% year over year, and beat estimates by $88.4 million. The New York-based banking firm announced the acquisition of California-based direct indexing solutions provider Optimal Asset Management in early December.

At the end of the third quarter of 2021, 46 hedge funds in the database of Insider Monkey held stakes worth $4.6 billion in The Bank of New York Mellon Corporation (NYSE:BK), compared to 52 the preceding quarter worth $4.9 billion.

Just like Apple Inc. (NASDAQ:AAPL), Bank of America Corporation (NYSE:BAC), American Express Company (NYSE:AXP), and The Coca-Cola Company (NYSE:KO), The Bank of New York Mellon Corporation (NYSE:BK) is one of the valuable stocks held by Warren Buffett as of Q3 2021.

9. DaVita Inc. (NYSE:DVA)

Percentage of Berkshire Hathaway's 13F Portfolio: 1.43%

Berkshire Hathaway's Stake Value: $4,196,471,000

Number of Hedge Fund Holders: 39

DaVita Inc. (NYSE:DVA) is a kidney dialysis provider and one of the largest healthcare companies operating in the $91 billion hemodialysis market. As of the third quarter of 2021, the Colorado-based dialysis company treated 241,600 patients in 3,155 outpatient centers in the US and ten countries abroad. During the same period, the company opened nine new dialysis centers and acquired one in the US.

The healthcare stock has underperformed in the recent quarters but is up 54% in the last three years. Additionally, Berkshire Hathaway owns $4.2 billion worth of DaVita Inc. (NYSE:DVA) shares as of Q3 2021, up from $3.09 billion in Q3 2020. Berkshire Hathaway first invested in DaVita Inc. (NYSE:DVA) in Q4 of 2011 with 5.37 million shares, and as of Q3 2021, the fund's stake had grown to 36.1 million shares.

On October 28, DaVita Inc. (NYSE:DVA) reported its Q3 2021 earnings and had a revenue of $2.94 billion, topping the consensus by $23.5 million. Deutsche Bank analyst Pito Chickering maintained a Buy rating on DaVita Inc. (NYSE:DVA) with a price target of $150 on November 17.

By the end of the third quarter of 2021, 39 hedge funds had stakes in DaVita Inc. (NYSE:DVA), the same in the preceding quarter.

8. U.S. Bancorp (NYSE:USB)

Percentage of Berkshire Hathaway's 13F Portfolio: 2.56%

Berkshire Hathaway's Stake Value: $7,514,279,000

Number of Hedge Fund Holders: 42

U.S. Bancorp (NYSE:USB) is a financial services holding firm based in Minnesota. The banking firm provides consumer, business, investment services, and wealth management. As of Q3 2021, the bank held $567 billion in assets.

With over 126 million shares worth $7.5 billion, U.S. Bancorp (NYSE:USB) is one of the biggest holdings of Warren Buffett's Berkshire Hathaway as of the end of September. Buffett scaled back his holdings in U.S. Bancorp (NYSE:USB) in the third quarter by 2%, marking the fourth quarter in a row that Berkshire Hathaway has reduced its position in the stock.

Overall, 42 funds of the 867 elite funds tracked by Insider Monkey reported owning stakes in the Minnesota-based company at the end of September 2021, up from 41 in Q2 2021.

The company had revenue of $5.9 billion and a net income of $2 billion in the third quarter of 2021. In late November, U.S. Bancorp (NYSE:USB) received an Equal Weight rating with a price target of $63 from Stephens analyst Terry McEvoy.

7. Verizon Communications Inc. (NYSE:VZ)

Percentage of Berkshire Hathaway's 13F Portfolio: 2.92%

Berkshire Hathaway's Stake Value: $8,578,115,000

Number of Hedge Fund Holders: 57

Comprising 2.92% of Berkshire Hathaway's portfolio, Verizon Communications Inc. (NYSE:VZ) is one of Warren Buffett's top stock picks. Aside from offering mobile and internet services, the New Yok-based telecom company was also the first to launch a commercial 5G network in the world in 2019. Verizon Communications Inc. (NYSE:VZ) reported that more than 25% of wireless phone customers had 5G-capable devices at the end of the third quarter of 2021.

The company announced a normalized actual EPS of $1.41 in the third quarter, beating estimates by $0.05. The New York-based communication company gained more attention from market analysts. Cowen analyst Colby Synesael increased his price target for Verizon Communications Inc. (NYSE:VZ) to $71 from $68 in October. Even with an improved sales outlook for the rest of the year, Synesael believes the stock is currently undervalued.

The handsome dividend offered by Verizon Communications Inc. (NYSE:VZ) is one of the reasons income investors follow the mobility giant. The company pays an annual dividend of $2.56 per share, for a 5.05 % yield.

In late November, Verizon Communications Inc. (NYSE:VZ) added 20 million subscribers under its network after the company acquired TracFone Wireless from América Móvil. The transaction was valued at $6 billion.

With a total stake of $10.4 billion, 57 out of 867 hedge funds tracked by Insider Monkey owned Verizon Communications Inc. (NYSE:VZ) shares at the end of the third quarter, compared to 63 in the previous quarter.

6. Moody's Corporation (NYSE:MCO)

Percentage of Berkshire Hathaway's 13F Portfolio: 2.98%

Berkshire Hathaway's Stake Value: $8,760,485,000

Number of Hedge Fund Holders: 58

Moody's Corporation (NYSE:MCO) is one of Warren Buffett's largest and longest-held positions. Berkshire Hathaway has owned the stock for over 20 years and it accounts for 2.98% of the fund's holdings as of Q3 2021.

The New York-based financial services firm examines the credit risk of companies and governments. The company also provides business analytics. In early November, Moody's Corporation (NYSE:MCO) acquired Bogard AB, a Nordic politically exposed person (PEP) data company for an undisclosed term. Bogard AB will be an arm of Moody's Corporation's (NYSE:MCO) analytics segment.

Moody's Corporation (NYSE:MCO) reported an EPS of $2.69 in the third quarter of 2021, beating estimates by $0.14. The stock gained 34.6% year to date.

Moody's Corporation (NYSE:MCO) is one of Warren Buffett's top holdings along with Apple Inc. (NASDAQ:AAPL), Bank of America Corporation (NYSE:BAC), American Express Company (NYSE:AXP), and The Coca-Cola Company (NYSE:KO)

In the Q2 2021 investor letter of Qualivian Investment Partners, the fund mentioned Moody’s Corporation (NYSE:MCO) and discussed its stance on the firm. Here is what the fund said:

“Moody’s: Revenue, operating profit margins, and EPS all exceeded expectations, and annual guidance for these items (and for free cash flow) was raised. In MIS (Moody’s Investors Service) which houses the traditional rating business, the outlook for debt issuance was raised for the remainder of the year, while MA (Moody’s Analytics) also came in ahead of expectations. The company leveraged strong revenue growth with strong operating profit margin improvement of 200 bps, with EPS coming in $0.22 ahead of consensus estimates. Management alluded to having interesting opportunities in their M&A pipeline, which we will have to assess when the time comes, but Moody’s management team has been very effective at allocating capital in the past toward value-creating bolt-on acquisitions, especially in their Moody’s Analytics business, a key growth driver for the company.”

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Disclosure. None. Warren Buffett's Top 10 Stock Picks is originally published on Insider Monkey.