Warren Buffett Just Revealed the 8 Stocks That Berkshire Hathaway Will Likely Hold Forever

Legendary Investor, Buffett, had specifically mentioned these 8 Stocks that Berkshire is likely to hold forever, lets see if any of them surprises you!

#1 American Express

Berkshire Hathaway first bought shares of American Express in 1964, after the company suffered a major setback due to the Salad Oil Scandal. Buffett saw an opportunity to buy a high-quality business at a bargain price, and he was right. American Express recovered from the crisis and became one of the most successful financial services companies in the world.

Buffett likes American Express because it has a strong competitive advantage, or what he calls a moat. The company has a loyal customer base, a powerful brand, and a network of merchants that accept its cards. American Express also earns high returns on equity and capital, and generates consistent cash flows.

American Express has faced some challenges in recent years, such as losing its partnership with Costco and facing increased competition from other card issuers. However, Buffett remains confident in the company's long-term prospects, as it continues to innovate and expand its offerings. In 2023, Berkshire Hathaway increased its stake in American Express to 18.8%, making it the second-largest shareholder.

#2 Coca-Cola

Berkshire Hathaway started buying shares of Coca-Cola in 1988, after the stock price dropped due to concerns about the company's growth and profitability. Buffett recognized that Coca-Cola had a durable franchise, a global reach, and a loyal consumer base. He also admired the company's management and culture.

Buffett likes Coca-Cola because it has a wide moat, based on its brand recognition, distribution network, and product portfolio. Coca-Cola sells more than 500 brands of beverages in over 200 countries, and has a market share of more than 40% in the global soft drink industry. Coca-Cola also pays a generous and growing dividend, and has a history of returning capital to shareholders through buybacks.

Coca-Cola has faced some headwinds in recent years, such as changing consumer preferences, regulatory pressures, and currency fluctuations. However, Buffett remains optimistic about the company's long-term potential, as it adapts to the market trends and invests in new categories and geographies. In 2023, Berkshire Hathaway owned 9.3% of Coca-Cola, making it the largest shareholder.

#3 Occidental Petroleum

Berkshire Hathaway made a big bet on Occidental Petroleum in 2019, when it agreed to invest $10 billion in the company to help it acquire Anadarko Petroleum. In exchange, Berkshire received preferred shares that pay an 8% annual dividend, plus warrants to buy common shares at a low price. Buffett made this deal without consulting his board or his lieutenants, as he saw a unique opportunity to earn a high return.

Buffett likes Occidental Petroleum because it has a large and diversified portfolio of oil and gas assets, mainly in the U.S. The company is also a leader in carbon capture, a technology that aims to reduce greenhouse gas emissions by storing carbon dioxide underground. Buffett believes that this technology, along with Occidental's oil and gas operations, are in the national interest and have long-term value.

Occidental Petroleum has faced some difficulties in recent years, such as the collapse of oil prices, the debt burden from the Anadarko deal, and the activist pressure from Carl Icahn. However, Buffett remains supportive of the company and its management, as it has taken steps to improve its financial position and operational efficiency. In 2023, Berkshire Hathaway converted its preferred shares into common shares, and increased its stake in Occidental Petroleum to 27.8%.

#4 Itochu

Berkshire Hathaway surprised the market in 2020, when it announced that it had acquired stakes of around 5% in each of the five major Japanese trading houses. These companies, also known as sogo shosha, are conglomerates that engage in a wide range of businesses, such as commodities, energy, machinery, chemicals, food, textiles, and finance. Buffett later increased his stakes in each of the companies to around 9%.

Buffett likes Itochu, as well as the other four trading houses, because they have diversified and resilient business models, strong balance sheets, and attractive valuations. He also sees them as a way to gain exposure to the Japanese economy and its trading partners, especially in Asia. Buffett has praised the management and culture of these companies, and has expressed his long-term commitment to them.

Itochu is the largest and most profitable of the five trading houses, with a market capitalization of over $40 billion and a return on equity of over 10%. The company has a competitive edge in its consumer-related businesses, such as food, retail, and e-commerce. Itochu also has strategic partnerships with leading companies, such as CITIC Group in China and Charoen Pokphand Group in Thailand. In 2023, Berkshire Hathaway owned 9.1% of Itochu.

The other four trading houses

The other four trading houses that Buffett revealed as his forever holdings are Marubeni, Mitsui, Mitsubishi, and Sumitomo. They share some similarities with Itochu, such as having diversified and resilient business models, strong balance sheets, and attractive valuations. They also have some differences, such as having different areas of focus, strengths, and strategies.

#5 Marubeni

Marubeni is the second-largest of the five trading houses, with a market capitalization of over $30 billion and a return on equity of over 8%. The company has a competitive edge in its energy and infrastructure businesses, such as power generation, oil and gas, and transportation. Marubeni also has strategic partnerships with leading companies, such as Chevron in the U.S. and Saudi Aramco in Saudi Arabia. In 2023, Berkshire Hathaway owned 9.2% of Marubeni.

#6 Mitsui

Mitsui is the third-largest of the five trading houses, with a market capitalization of over $25 billion and a return on equity of over 7%. The company has a competitive edge in its innovation and mobility businesses, such as information technology, healthcare, and automobiles. Mitsui also has strategic partnerships with leading companies, such as Vale in Brazil and Mitsui Sumitomo Insurance in Japan. In 2023, Berkshire Hathaway owned 9.3% of Mitsui.

#7 Mitsubishi

Mitsubishi is the fourth-largest of the five trading houses, with a market capitalization of over $20 billion and a return on equity of over 6%. The company has a competitive edge in its industrial and financial businesses, such as metals, machinery, and banking. Mitsubishi also has strategic partnerships with leading companies, such as Mitsubishi Corporation in Japan and Mitsubishi UFJ Financial Group in Japan. In 2023, Berkshire Hathaway owned 9.4% of Mitsubishi.

#8 Sumitomo

Sumitomo is the fifth-largest of the five trading houses, with a market capitalization of over $15 billion and a return on equity of over 5%. The company has a competitive edge in its mineral and environmental businesses, such as copper, nickel, and recycling. Sumitomo also has strategic partnerships with leading companies, such as Sumitomo Chemical in Japan and Sumitomo Electric Industries in Japan. In 2023, Berkshire Hathaway owned 9.5% of Sumitomo.

Why Apple wasn't one of them

You might be wondering why Apple, which is the largest holding in Berkshire Hathaway's portfolio, wasn't one of the eight stocks that Buffett revealed as his forever holdings. After all, Buffett has praised Apple as an extraordinary company, with a loyal customer base, a strong brand, and a high-quality management.

The reason is that Buffett doesn't have the same level of control over Apple as he does over the other eight stocks. Berkshire Hathaway owns only 5.4% of Apple, compared to 9% or more of the other eight stocks. This means that Buffett can't influence Apple's decisions, such as its capital allocation, dividend policy, or acquisitions. Buffett also can't prevent Apple from being acquired by another company, which could affect Berkshire Hathaway's returns.

Buffett has said that he would love to own 100% of Apple, but he knows that it's impossible. He has also said that he doesn't plan to sell any of his Apple shares, unless something changes materially. However, he hasn't committed to holding Apple forever, as he has with the other eight stocks. This doesn't mean that Buffett doesn't like Apple, but rather that he recognizes the limitations of his ownership.

Conclusion

In this article, you learned about the eight stocks that Buffett revealed as his forever holdings, and why he likes them. You also learned about the criteria and principles that Buffett uses to select and evaluate his long-term holdings, and how he diversifies his portfolio across different sectors, regions, and business models. You also learned about how Buffett has rewarded his shareholders with consistent growth and value creation, and how he has adapted to changing market conditions and opportunities.

We hope you enjoyed reading this article, and that you gained some insights and tips that can help you improve your own investing skills and knowledge. If you have any questions or comments, please feel free to contact us. We'd love to hear from you.

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