S&P 500: Warren Buffett Makes All His Money From Just 11 Stocks

Warren Buffett is having a much better year than most S&P 500 investors. And he can thank a handful of stocks for that.


Just 11 stocks in Berkshire Hathaway‘s (BRKB) just-reported portfolio of 50 U.S.-listed companies — including Occidental Petroleum (OXY), Chevron (CVX) and McKesson (MCK) — are up this year, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. That means only 22% of his stocks are up in this rough year for the S&P 500.

It’s not a stellar performance. It’s a lower hit rate than the S&P 500, where more 27% of the stocks in the index are up this year. But the fact highlights how important Buffett’s runaway winners are this year. Shares of Berkshire Hathaway are up 2.5% this year, while the S&P 500 is down 17%.

The Source Of Most Of Buffett’s Big Gains

When you’re losing money on three-quarters of your stocks but still beating the market like Berkshire Hathaway is this year, it pays to see what’s working so well.

And for Buffett there’s no question what that is: energy. Both of Buffett’s top stocks this year hail from the energy sector. And the energy sector is the only one among the 11 S&P 500 sectors that are up this year.

Energy is the third-largest-weighted sector in Buffett’s portfolio, at 13%. In contrast, energy is just 5% of the S&P 500, ranking it eighth of all sectors. And that’s enough to make up for the fact that Buffett’s two largest individual bets, Apple (AAPL) and Bank of America (BAC), are both down roughly 16% this year.

Looking At Buffett’s Big Winners

Some of Buffett’s energy stock picks, too, have been absolute home runs. Occidental Petroleum, a Houston-based energy explorer, is Buffett’s top stock this year by far, up more than 142%. That’s been an exceptionally good call, trouncing the 64% gain of the Energy Select Sector SPDR ETF (XLE).

And he’s been aggressively adding to the position, too. At a portfolio position of $14.5 billion, Occidental is now Buffett’s sixth-largest bet. It’s just behind some of his perennial favorites like Coca-Cola

(KO), which incidentally is also up this year, by nearly 2%.

Berkshire Hathaway now owns more than 21% of Occidental.

Another of Buffett’s giant winners is an energy play: Chevron. Shares are up more than 54% this year. Buffett bet big on it too, magnifying the benefit. Berkshire Hathaway’s stake in the company is valued at north of $31 billion, making it the No. 3 largest position in his portfolio.

Buffett’s Winners: More Than Just Energy

That’s not to say energy is the only reason Buffett is having a better-than-the-S&P 500 kind of year. McKesson, a provider of services to the pharmaceutical industry, has seen its shares shoot up more than 46% this year. At a $1.1 billion position size, it’s not a huge bet for Buffett’s Berkshire Hathaway, but it’s not a tiny one either.

And Buffett is sticking with telecom stock T-Mobile US (TMUS) after finally throwing in the towel on its rival Verizon (VZ). And it’s a good thing. Shares of T-Mobile — which Buffett is still a relatively small investor in, with less than 1% of shares outstanding — are up more than 27% this year.

But it’s important to note that it’s hard to evaluate Buffett’s record based on just one year — no matter how dramatic of a year it has been.

“Do you want to know why (Buffett) is one of the richest people in the world? In part, of course, it’s that he’s compounded money at a high rate,” said Whitney Tilson of Empire Financial Research. “But most people don’t fully appreciate the equally important second part of the equation: He’s done it for a long period of time.”

But it’s still worth noting what’s working in a year like this for the world’s most famous investor.

Warren Buffett’s Top Stocks This Year

Top-performing stocks in Berkshire Hathaway’s portfolio

Company Symbol Year-to-date change Sector
Occidental Petroleum (OXY) 143.6% Energy
Chevron (CVX) 55.8 Energy
McKesson (MCK) 46.1 Health Care
T-Mobile US (TMUS) 27.5 Communication Services
Globe Life (GL) 20.1 Financials
Activision Blizzard (ATVI) 11.0 Communication Services
Kroger (KR) 6.0 Consumer Staples
Kraft Heinz (KHC) 5.2 Consumer Staples
Coca-Cola (KO) 2.1 Consumer Staples
Johnson & Johnson (JNJ) 1.9 Health Care
Markel (MKL) 1.7 Financials
Sources: S&P Global Market Intelligence, IBD

Follow Matt Krantz on Twitter @mattkrantz


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