Warren Buffett just revealed the eight stocks that Berkshire Hathaway will likely hold forever — and Apple wasn’t one of them

By | February 27, 2024

Warren Buffett is known as a buy-and-hold investor. In fact, he once said, “If we own parts of excellent companies with excellent management, our favorite period is forever.”

However, Buffett doesn’t hold onto all the stocks he buys forever. There is quite a bit of churn Berkshire Hathaway‘S (NYSE: BRK.A) (NYSE: BRK.B) portfolio. But the legendary investor has identified a handful of Berkshire stocks that he thinks are forever stocks. Buffett just revealed the eight stocks he thinks Berkshire Hathaway will likely hold forever Apple (NASDAQ: AAPL) wasn’t one of them.

Two long-term investments in Berkshire

In his letter to Berkshire Hathaway shareholders last year, Buffett discussed two long-term interests: American Express (NYSE:AXP) And The Coca-Cola Company (NYSE:KO). He noted that Berkshire built up the large positions in both stocks in the mid-1990s after several years of buying.

American Express and Coca-Cola have been big winners for Buffett and Berkshire. In his letter written last year, he used them to make an important point: “The weeds wither in significance as the flowers bloom. Over time, it only takes a few winners to work miracles.”

Buffett mentioned AmEx and Coca-Cola again in his most recent letter to Berkshire shareholders, released Saturday. He emphasized the lesson from these two purchases: “If you find a really great company, stick with it.”

Another stock that Buffett really likes

In his latest shareholder letter, Buffett added other stocks he said Berkshire “expected”[s] to be maintained indefinitely.” The first new addition to the list was Western petroleum (NYSE:OXY).

Berkshire bought Occidental’s shares hand over fist. At the end of 2023, the conglomerate’s stake in the company stood at 27.8%. It is now the sixth largest position in Berkshire’s portfolio.

Buffett emphasized that Berkshire has no plans to fully acquire Occidental or gain control of the oil and gas producer. However, he said that “we are very happy with our ownership” along with the option to increase its position.

There are two things about Occidental that Buffett especially likes. First, the company has extensive oil and gas operations in the US. Second, Occidental is a leader in carbon capture.

While Buffett acknowledged that the technology remains unproven, he argued that it, along with Occidental’s large oil and gas reserves, is “very much in the best interest of our country.”

Five birds of a feather

Buffett discussed the other five stocks he thinks Berkshire will hold almost forever as a group, rather than individually. They are the five huge Japanese trading houses:

  • Itochu (OTC: ITOCF) (OTC: ITOCIE)

  • Marubeni (OTC: MARUY)

  • Mitsui (OTC: MITSF) (OTC: MITSY)

  • Mitsubishi (OTC: MSBHF)

  • Sumitomo (OTC: SSUM.F) (OTC: SSUM.Y)

Berkshire currently owns stakes of approximately 9% in each of these Japanese companies. Buffett noted that the conglomerate has committed not to increase its stake in any of these companies above 9.9%.

What does Buffett like about these five companies? For starters, he said each of them “operates in a highly diversified manner, somewhat similar to the way Berkshire itself is governed.” He likes Japanese companies’ shareholder-friendly policies, including smart share buybacks. Buffett also stated that the investments could open the door for Berkshire to partner with the companies in the future.

What about Apple?

Apple remains by far Berkshire’s largest holding. Buffett didn’t include the tech giant in his list of stocks Berkshire would hold forever. In the fourth quarter of 2023, Berkshire even reduced its position in Apple.

Does this mean that Buffett doesn’t view Apple as a forever stock? I do not think so.

To start, it’s important to remember that Buffett only focuses on a small number of specific Berkshire holdings in each shareholder letter. He did not discuss Occidental (except for one brief mention), Itochu, Marubeni, Mitsui, Mitsubishi or Sumitomo in last year’s letter, even though Berkshire owned all of these stocks at the time.

In May 2023, Buffett stated at Berkshire’s shareholder meeting that Apple is “a better company than any company we own.” Again, all eight stocks he thinks Berkshire will own indefinitely were in Berkshire’s portfolio when he made that statement.

The bottom line is that we shouldn’t assume that there aren’t any other stocks besides American Express, Coca-Cola, Occidental, and the five Japanese trading house stocks that Berkshire will hold for decades to come. I’m willing to bet that if Buffett were asked to name the entire list, Apple would be on it – and probably a number of other stocks as well.

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American Express is an advertising partner of The Ascent, a Motley Fool company. Keith Speights has positions at Apple and Berkshire Hathaway. The Motley Fool holds positions in and recommends Apple and Berkshire Hathaway. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.

Warren Buffett just revealed the eight stocks that Berkshire Hathaway will likely hold forever — and Apple wasn’t one of them. originally published by The Motley Fool

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