
Mid-Year Review: How Are Warren Buffett's Investments Holding Up?
Warren E. Buffett is undoubtedly the world's most followed investor, and so even though his picks aren't always right on the money, it is worth studying the moves he makes.
And with six months of a turbulent year behind us, now is the perfect time to take a look at the biggest winners and losers so far in the Oracle of Omaha's billion-dollar Berkshire Hathaway (BRK.A) - Get Report portfolio.
On the positive side, Kraft Heinz (KHC) - Get Report , Buffett's biggest investment,stands out. He owns more than 325 million shares, a nearly 27% stake that is worth $29 billion.
Kraft Heinz is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. See how Cramer rates the stock here. Want to be alerted before Cramer buys or sells KHC? Learn more now.
The gargantuan bet has paid off, with Kraft Heinz gaining more than 23% year to date.
Concerns about the Brexit referendum in the first half punished food stocks with European exposure. However, Kraft Heinz managed to escape unscathed, unlike Coca-Cola European Partners, Mondelez and SodaStream, which have experienced greater earnings weakness from euro and pound volatility.
Consumer goods stocks such as Kraft Heinz have also weathered the uneven read on U.S. consumer spending and global demands. Plus, the company benefited from a 38% jump in first-quarter profits, thanks to successful cost-cutting efforts.
This shows that Buffett did the right thing when he partially financed the Kraft-Heinz merger last year.
Meanwhile, IBM (IBM) - Get Report , which clocked a return of more than 10% in the first half this year, is a transformation story that has yet to play out fully as the former hardware and services provider transitions its business model to focus more on cloud computing and software as a service.
Dialysis provider DaVita HealthCare Partners also delivered double-digit returns, as the company continued to expand its global reach into emerging markets, as well as sharpen its competitive edge in the U.S. with a series of strategic mergers.
But the Buffett stock that gave investors the biggest surprise was Walmart, with its 20% gain. Under pressure from e-commerce players such as Amazon, the lumbering retail giant has been to hell and is fighting back.
On the flip side were the losers of the portfolio.
The biggest dud on Buffett's books was Wells Fargo (WFC) - Get Report ,a financial services company that is known for conservative lending.
Unlike rivals such as Citigroup, Goldman Sachs (also a Berkshire Hathaway holding) or Morgan Stanley, Wells Fargo is considered a safe investment. However, the stock's performance hasn't been so steady, dropping more than 14%.
But, Berkshire Hathaway remains undaunted, even raising its Wells Fargo stake beyond 10%.
Thanks to the Brexit vote and related anxiety, bank stocks have been under pressure. But Wells Fargo has held up better than Citigroup, Deutsche Bank, Goldman Sachs and Morgan Stanley, whose shares have all dropped between 20% and 40%.
American Express, with a 14.48% drop, is a close second to the worst performer in the portfolio. Although the payment company has been taking competition from On Deck and Square head-on, it has lost its main business, Costco.
Wells Fargo, Citigroup and Costco are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. See how Cramer rates the stocks here. Want to be alerted before Cramer buys or sells WFC, C and COST?Learn more now.
AmEx has cut its chief executive's salary to its lowest since 2008, is trimming costs, is spending more to obtain new cardholders, and has raised dividends and boosted buybacks. Buffett seems confident that AmEx will survive this period of uncertainty.
Phillips 66,Moody's and U.S. Bancorp lost a bit of their luster in the first half, though Phillips 66 looks attractive because of its non-pure-play oil refining characteristics.
Moody's and U.S. Bancorp, as well as other financial and banking names, suffered for to the same reasons Wells Fargo did: Brexit-related uncertainties and low interest rates.
Let's hope these dismal contenders turn over a new leaf in the second half.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.










