Warren Buffett spent more buying these stocks than he did on Apple, Chevron, Coca-Cola, American Express and Occidental Petroleum combined!

When Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett speaks, professional and ordinary investors pay close attention. This is because the “Oracle of Omaha”, as it became known, easily surpassed the reference standard S&P 500 in the return column over nearly six decades.

While the S&P 500 has produced an impressive total return, including dividends, of about 34,200% since the mid-1960s, Buffett has overseen an aggregate return on his company’s Class A shares (BRK.A) that approaches 5,000,000% ! With such outperformance, it’s no wonder that tens of thousands of investors flock to Omaha, Nebraska, every year to hear Buffett talk about stocks and the U.S. economy.

It also explains why investors eagerly await Berkshire Hathaway’s quarterly Form 13F filing. A 13F provides a snapshot of what Wall Street’s brightest and most successful money managers bought and sold in the most recent quarter.

While Berkshire’s 13Fs have historically been a gold mine for investors, they don’t tell the whole story about Warren Buffett’s favorite stocks to buy.

The Oracle of Omaha spent a small fortune on Berkshire’s top holdings

With the preface I am writing this before Berkshire Hathaway files its 13F on Wednesday, May 15, The combination of Berkshire’s previous operating reports, 13Fs, and annual letters to shareholders show that Warren Buffett and his investment team spent a small fortune building many of their key positions.

Based on Buffett’s admissions during his company’s last annual shareholder meeting, he and his top investment advisors (Todd Combs and Ted Weschler) sold about 13% of his company’s leading position in technology stocks. Litter (NASDAQ:AAPL) for tax purposes in the quarter ending in March. This reduced the market value of Berkshire’s stake in Apple to about $144.5 billion as of the close on May 10.

However, Buffett and his team are making a huge unrealized gain. According to 13F aggregation site WhaleWisdom.com, Berkshire Hathaway is estimated to have a cost basis of less than $40 on Apple. This suggests that Buffett & Co. spent about $31.3 billion to buy the Apple shares it currently owns.

The Oracle of Omaha and his team also spent a lot of money building Berkshire’s holdings in two integrated markets energy companies, Chevron (NYSE:CVX) It is Western Oil (NYSE: OXY). Around $16 billion and $13 billion were, respectively, invested in shares of Chevron and Occidental – and this is without counting the $8.5 billion in preferred shares of Occidental Petroleum that Berkshire also owns.

The story continues

Spending a total of $29 billion on energy stocks is a pretty clear indication that the smartest investment minds at Berkshire expect the spot price of crude oil to remain high. After years of capital underinvestment during the pandemic by major energy companies (including Chevron and Occidental), the global supply of crude oil is limited. With no easy solution in sight, higher spot prices should be beneficial to both companies’ high-margin drilling segments.

Warren Buffett put a good chunk of his company’s capital to work when the beverage company Coke (NYSE:KO) and credit service provider American Express (NYSE:AXP) were added to Berkshire’s portfolio in 1988 and 1991, respectively. Based on a previous annual letter to shareholders, Buffett points out that his company’s cost base in Coca-Cola and AmEx is about $1.3 billion for each company.

In his last annual letter to shareholders, Buffett referred to Coca-Cola and American Express as “indefinite” holdings. These are companies with especially strong brands and marketing that benefit from long periods of economic growth.

Warren Buffett has bought more than $77 billion of his favorite stocks since 2018

Collectively, Warren Buffett has invested about $63 billion in these five core holdings. While it may seem like a lot of money, it’s actually dwarfed by the amount of money he’s spent buying shares of his favorite stocks over the past six years.

What makes this buying activity somewhat mysterious is that it doesn’t appear in Berkshire Hathaway’s quarterly 13Fs. To track the buying activity of Buffett’s favorite stocks, you’ll need to dig deeper into the company’s quarterly operating results.

Near the end of each quarterly report, just before executive certifications, you will find complete details on share repurchases made during the previous three months. That’s right… the company that Warren Buffett spent more money buying shares of than Apple, Chevron, Coca-Cola, American Express and Occidental, CombinedIt’s Berkshire Hathaway!

Before mid-July 2018, Warren Buffett and the late, great Charlie Munger had their hands tied when it came to share buybacks. Repurchases were only permitted if Berkshire shares fell to or below 120% of book value (i.e., no more than 20% above the last quarter’s stated book value). At no point did Berkshire shares reach that threshold during the 2010s.

On July 17, 2018, the Berkshire Hathaway board adopted new measures that allowed Buffett and Munger to come off the proverbial bench and work their magic. Berkshire’s board gave the green light to share repurchases with no cap or end date as long as:

• Berkshire Hathaway has at least $30 billion in cash, cash equivalents and U.S. Treasury securities on its balance sheet; It is

• Warren Buffett believes that stocks are intrinsically cheap.

Since this change was made in July 2018, Warren Buffett has repurchased shares of his own company for 23 consecutive quarters. Including the $2.6 billion spent on repurchases in the first quarter, the Oracle of Omaha repurchased more than $77 billion in Berkshire shares in less than six years – $14 billion more than was collectively spent on Apple, Chevron, Coca-Cola, AmEx, and Western Petroleum.

Since Buffett’s company doesn’t pay dividends, a steady share buyback program is an easy way for the Oracle of Omaha to reward its long-term shareholders. Consistent share repurchases and reducing the number of shares outstanding are gradually increasing the equity holdings of long-term investors.

Additionally, companies with stable or increasing net income typically see their earnings per share (EPS) increase as the number of shares outstanding decreases. With Berkshire’s cash holdings potentially approaching $200 billion this quarter, Buffett has every incentive to continue buying his favorite stocks.

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American Express is an advertising partner of The Ascent, a Motley Fool company. Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Apple, Berkshire Hathaway and Chevron. The Motley Fool recommends Occidental Petroleum. The motley fool has a disclosure policy.

Warren Buffett spent more buying these stocks than he did on Apple, Chevron, Coca-Cola, American Express and Occidental Petroleum combined! was originally published by The Motley Fool