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Warren Buffett, often referred to as the Oracle of Omaha, has built an extraordinary reputation for his investing acumen, particularly through his company, Berkshire Hathaway. Over the years, Berkshire Hathaway has developed a portfolio filled with notable financial sector stocks that have consistently contributed to the company’s successWhile some investors may look to Berkshire’s portfolio for inspiration, it’s important to take a detailed look at the stocks Buffett has included in his holdingsThree financial stocks within Berkshire's portfolio continue to play a significant role in shaping the company’s overall performance.
Berkshire Hathaway (NYSE:BRK.B)
One of the standout stocks in Berkshire Hathaway’s portfolio is its own stockBerkshire Hathaway is not only known for its $300 billion portfolio of publicly traded companies but also for its diversified array of privately held businessesThe conglomerate owns well-known consumer brands such as Dairy Queen, Fruit of the Loom, and Duracell, in addition to operating businesses like railroads, oil and gas pipelines, and insurance giant GEICO.
Berkshire Hathaway is distinctive in that it does not pay a dividendInstead, profits from its various businesses are reinvested back into the company, which has allowed it to accumulate over $276 billion in cash, ready to be deployed for future acquisitions or other opportunities that may ariseThis business model has enabled Berkshire to outperform the broader S&P 500 over the years.
Despite concerns about succession due to Buffett’s age, the company has established a strong internal cultureThe chosen successor has been involved with Berkshire for over 25 years, ensuring continuity in its management style.
American Express (NYSE:AXP)
American Express is another financial stock that plays a central role in Berkshire Hathaway’s portfolioBuffett’s connection to American Express dates back to the 1960s, though his more substantial and long-term investment in the company began in the 1990sToday, Berkshire owns a significant 21% of American Express, making it one of the company’s largest holdings, representing over 12% of its overall portfolio.
American Express, founded in 1850, has managed to evolve through several economic downturns, including the Great Depression and the financial crisis of 2008-2009The company’s business model revolves around providing credit to consumers and businesses, a sector that remains in high demand as modern consumer culture continues to rely heavily on credit card debtAs a result, American Express has maintained a strong position within the financial services industry.
Visa (NYSE:V)
Visa is another notable stock within Berkshire Hathaway’s portfolioA leader in the payment industry, Visa facilitates transactions between banks and merchants, earning revenue from each Visa-branded transactionOver the years, the world has shifted away from cash payments, boosting the use of digital payments and driving Visa’s growth.
Buffett first added Visa to Berkshire’s portfolio in 2011, shortly after Visa’s initial public offering (IPO)The stock has performed exceptionally well since then, delivering significant returnsVisa continues to be a highly profitable company, converting more than half of its revenue into free cash flow, which is often used to repurchase shares and pay dividends.
While Visa represents a smaller portion of Berkshire’s portfolio (0.8%), it remains an essential part of the company’s long-term strategyDespite its large size, Visa continues to grow, with analysts projecting earnings growth of over 12% annually, ensuring that the company remains a strong presence in the payment industry.
