Warren Buffett is generally considered to be the best investor of modern times. After all, becoming the world’s richest man on paper lends itself to credibility and it probably means he knows a thing or two. Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-A) now own what was nearly $130 billion in common and preferred stock of U.S. public companies.
The year 2016 is turning out to be an unusual year. We had a mini-crash at the start of the year for almost seven weeks, followed by an immediate snapback recovery as Japan and Europe went deeper into quantitative easing and negative interest rates.
Investors often love watching the top stocks and new additions and deletions from Buffett’s top stock holdings each quarter. It is always amazing to see that some of Buffett’s stocks do exceptionally better than the market and others do considerably worse.
As of Wednesday, July 6, the Dow Jones Industrial Average was up 3.7% and the S&P 500 was up 3.3% so far in 2016. Berkshire Hathaway itself was up 7.6% year to date in the A-shares.
24/7 Wall St. wanted to take a look at the top five positions in the Buffett holdings that were the worst year-to-date performers. This does of course include preferred stakes if convertible, but it screens out the positions that are very small or that have no size at all. Brief color and commentary has been added on each position.
Bank of America
Bank of America Corp. (NYSE: BAC) is down almost the same amount in 2016 as it was a year ago: −23.76% at the end of 2015 and −23.79% since this time a year ago. It is important to keep in mind that Buffett’s stake here is a post-recession convertible preferred equity stake, so Buffett’s price may not be down this much if those securities were assigned a market value. That being said, this certainly impacts the value, and it was a whopping $5 billion investment that is still worth far more now.
The bank’s common stock most recently closed trading at $12.86, with a consensus analyst price target of $17.33 and a 52-week trading range of $10.99 to $18.48. Bank of America did just get back to a normalization of its capital returns from the Federal Reserve stress tests of 2016.
Goldman Sachs
The Goldman Sachs Group Inc. (NYSE: GS) has seen a total return of −19.17% in 2016, and shares have seen a return of −29.5% from a year ago. Buffett owns this stake of more than 10.9 million shares after converting preferred shares bought at a better price than the government bailout money during the recession. It also used to be a stake of 12.63 million shares, but the current value for the stake is almost $1.6 billion.
Goldman Sachs shares closed trading at $145.58, in a 52-week range of $138.20 to $214.61. Its market capitalization rate is almost $64 billion and the consensus analyst price target is $181.41.
GM
General Motors Co. (NYSE: GM) has seen a return of −15% so far in 2016, and shares are down 9.5% from a year ago. GM may not be at the forefront of the electric and hybrid car for investors, and it may lack the upsell of Elon Musk and other members of the new visionary crowd that the younger generation like so much. Some investors are treating these as though we are entering worse than just a peak-auto market. Still, it is now yielding close to 5%.
Buffett’s stake in General Motors was 50 million shares as of April 30, up from 41 million at one point in 2015. That is worth more than $1.3 billion and is versus a market cap of $44 billion. GM’s last price was $28.40, and its consensus price target is $37.06. The 52-week range is $24.62 to $36.88.
WABCO
WABCO Holdings Inc. (NYSE: WBC) has seen its shares drop by 14.9% year to date and has a seen its shares return −29.6% versus a year ago. This is actually a stake that Buffett has been trimming. It was last seen as 3.237 million shares at the end of April, down from 3.331 million shares at the end of 2015 and from the prior two reporting periods of 3.559 million in September 2015 and 3.78 million shares in June 2015. At one point the WABCO stake was over 4 million shares.
This stake is worth close to $300 million, a lot for you and me but not massive at all for Buffett and Berkshire. Shares were last trading at $88.38, within a 52-week range of $81.66 to $126.39. The stock also has a consensus price target of $118.43, and the market cap is $5 billion.
American Express
American Express Co. (NYSE: AXP) shares have returned −13.7% so far in 2016, and the credit card giant has returned −22.4% versus a year ago. This stake has remained in the big five. American Express has lost its deal with Costco and pressure remains on other card deals. There is also the notion that American Express actually takes on financial risk of its customers, unlike Visa and MasterCard. Don’t expect Warren Buffett to do anything about this giant stake — he’s owned it longer than most of us have had jobs.
This 151 million shares stake is worth almost $9 billion at current prices. The most recently closing share price was $59.48. Amex has a 52-week range of $50.27 to $81.66. It also has a consensus price target of $67.70. The market cap is nearly $57 billion.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
