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Warren Buffett's Top Holdings Sink on Coronavirus Fears

Several top holdings of Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) have sunk from record highs as coronavirus fears continue battering markets.


According to the top 10 holdings page, a GuruFocus Premium feature, Berkshire's top five holdings as of December 2019 were Apple Inc. (NASDAQ:AAPL), Bank of America Corp. (NYSE:BAC), Coca-Cola Co. (NYSE:KO), American Express Co. (NYSE:AXP) and Wells Fargo & Co. (NYSE:WFC).

Dow sinks deeper into bear market territory, tumbles nearly 10%

On Thursday, the Dow Jones Industrial Average closed at 21,200.95, down 2,352.27 points or 9.99% from Wednesday's close of 23,553.22. The 30-stock index entered bear market territory on Wednesday, having tumbled 20.29% from the all-time high of 29,551.42 on Feb. 12.

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Covid-19, the name of the virus, has now affected over 127,000 people worldwide, according to data compiled by John Hopkins University, with over 1,300 cases in the U.S. President Trump announced Wednesday night a 30-day travel ban from European countries in the Schengen area beginning on Friday. According to CNBC, Evercore ISI policy economist Ernie Tedeschi denounced Trump's announcement, saying in a note that the president failed to offer "major new ideas on stimulus" and instead proposed "a vague payroll tax holiday to Congress."

Stocks cut losses on the Federal Reserve's announcement it will pump $1.5 billion in asset purchases to "address highly-unusual disruptions in Treasury financing markets associated with the coronavirus outbreak." Despite this, markets dropped near the intraday lows when, according to Citi Research Global Economics Director Ebrahim Rahbari, such measures might not sufficiently "stabilize market sentiment" given escalated credit and health concerns.

Apple

Shares of Apple closed at $248.23, down 9.88% from the previous close. Despite this, Berkshire still has an estimated gain of 76.79% on the stock since first-quarter 2016, according to GuruFocus estimates.

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The Cupertino, California-based tech giant announced on Feb. 18 that due to the uncertainty regarding the virus outbreak, the company does not expect to meet its March-quarter revenue guidance as iPhone supply and product demand are "temporarily constrained." Nonetheless, GuruFocus ranks Apple's profitability 10 out of 10 on several signs of high quality, which include a 4.5-star business predictability rank, a high Piotroski F-score of 7 and operating margins that are outperforming 96.81% of global competitors despite contracting over the past five years.

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Buffett's conglomerate dedicated 29.74% of its $242.05 billion equity portfolio to Apple, owning 245,155,566 shares as of quarter-end.

Other gurus with holdings in the tech giant include Ken Fisher (Trades, Portfolio), Spiros Segalas (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio).

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Bank of America

Shares of Bank of America closed at $20.51, down 9.49% from the previous close of $22.66.

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Bank stocks are pressured as Treasury yields approach all-time lows. The 10-year Treasury constant maturity rate stands at 0.707%, while the 30-year Treasury constant maturity rate stands at 1.278%.

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According to GuruFocus, Bank of America's cash-to-debt ratio and debt-to-equity ratio underperform over 62% of global competitors, suggesting low financial strength. Despite this, the Charlotte, North Carolina-based bank's net margin and equity-to-asset ratios outperform over 60% of global banks.

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Berkshire's 32,578,803 shares of Bank of America occupy 13.46% of the equity portfolio.

Coca-Cola

Shares of Coca-Cola closed at $47.16, down 9.67% from the previous close of $52.21.

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GuruFocus ranks the Atlanta-based beverage giant's profitability 8 out of 10 on several positive investing signs, which include a return on equity that outperforms 97.80% of global competitors and an operating margin that has increased 6.9% per year on average over the past five years and is outperforming 94.68% of global beverage companies.

American Express

Shares of American Express closed at $83.53, down 12.44% from the previous close of $95.40.

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GuruFocus ranks the New York-based credit card company's financial strength 3 out of 10 on several weak indicators, which include an equity-to-asset ratio that underperforms 85.65% of global competitors and a debt-to-equity ratio that underperforms 71% of global credit service companies.

Wells Fargo

Shares of Wells Fargo closed at $27.20, down 15.84% from the previous close of $32.32.

GuruFocus ranks the San Francisco-based bank's financial strength 3 out of 10 on several weak indicators, which include cash-to-debt and debt-to-equity ratios underperforming over 60% of global competitors.

Disclosure: No positions.

Read more here:

  • 4 High-Quality Tech Companies as Coronavirus Fears Smash Markets Worldwide
  • 3 Five-Star Companies at Historically Low Price-Sales Ratios
  • Value Screeners Seek Opportunities in Coronavirus-Driven Market



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This article first appeared on GuruFocus.