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Warren Buffett Just Bought These Nine Stocks

Jason Fieber, Dividends and Income

Warren Buffett is a personal hero of mine. I say that not only in terms of investing. I’ve applied a lot of his life lessons to my own life. And I must say, my life is better off for all of it. But his investing prowess is what originally got me so interested in Buffett.

Even today, near the end of his storied career, he’s still making moves and doing things that we can all learn from.

This is what leads to today’s piece.

Warren Buffett runs Berkshire Hathaway, a large conglomerate. Buffett also controls a $270 billion common stock portfolio within Berkshire Hathaway.

This common stock portfolio has massive investments in some of the best businesses you’ll find. Berkshire just released their latest 13F filing, which goes over all of the transactions that took place over the fourth quarter of 2020.

Want to know which nine stocks Buffett has been buying?

Let’s dig in.

Berkshire Hathaway bought nine stocks over the course of Q4 2020.

Six buys were additions to pre-existing positions. Those six buys were:

What’s interesting about many of these stock buys is that I’ve been pointing out the attractiveness of many of these same stocks over the last few months. Being on the same page as Buffett feels pretty good.

For example, we did a video on Bristol-Myers Squibb in January.

We also put out a video on AbbVie in November, which might have been at the same exact time Berkshire Hathaway was scooping up shares.

Those are just six of the nine stocks that Buffett & Co. were busy buying. The next three stocks are new positions for Berkshire Hathaway. Those three stocks are:

A lot of stocks to take a look at here. But I’d argue the most interesting buy of all was Verizon. Why?

Well, because it was a pretty massive new investment, even by Berkshire Hathaway’s standards. Berkshire Hathaway’s bet on Verizon is worth over $8 billion, based on today’s market cap for Verizon stock. That’s noteworthy. Even Berkshire Hathaway, with their seemingly limitless capital, tends to put a billion or two to work at a time. Jumping in with $8 billion in one fell swoop says a lot about their confidence in a business.

In addition, we should keep in mind that Buffett’s two investing lieutenants, Todd Combs and Ted Weschler, both manage fairly large sums of capital for Berkshire Hathaway’s stock portfolio. The last time Buffett commented on this, they were managing about $13 billion each.

But $8 billion would take up a very significant percentage of capital for either manager. Thus, we can be pretty sure that it was Buffett who made the Verizon bet.

I think there’s a lot to like about Verizon as a long-term investment. First of all, smartphones are practically an extra appendage at this point. Consumers view access to the Internet in the same way they view access to electricity and water. And this reliance on mobile data and communications is only increasing with the sudden and widespread work-from-home theme playing out.

Plus, Verizon will benefit from the upcoming shift to 5G and all it promises to bring. There’s a future in which almost all devices are connected to a network. What will stand between people and a connected world will be the companies, like Verizon, that provide connectivity. I’d argue that Verizon has a perception problem. It’s thought of as a telecom, which implies a certain stodginess. Instead, it’s really more of a technology company at this point.

After all, the fanciest smartphone in the world isn’t very useful without access to a mobile network. And this symbiotic relationship will only strengthen with 5G. Verizon stock looks like a pretty solid long-term investment here.

Buffett is renowned for his ability to pick out great deals in the stock market. While I wouldn’t say Verizon stock is super cheap, it’s also not outrageously expensive.

The P/CF ratio on Verizon stock is 5.6. That compares well to the three-year average of 6.8. And the P/S ratio is right in line with its five-year average.

And the stock yields a very appealing 4.5%. That’s a juicy yield in a stingy market. It’s almost three times higher than the S&P 500’s yield.

This stock looks highly reasonable in terms of its valuation. Verizon stock is a Buffett-backed 5G play that offers a 4.5% yield. You could do a lot worse than that.

All of Berkshire’s buys are interesting. But I think the Verizon bet is the most interesting of all.

— Jason Fieber

P.S. If you’d like access to my entire six-figure dividend growth stock portfolio, as well as stock trades I make with my own money, I’ve made all of that available exclusively through Patreon.

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