For many investors, Apple (NASDAQ:AAPL) might have become the top name for WarrenBuffett stocks to sell.
It’s been about a week since Berkshire Hathaway (NYSE:BRK.B) revealed that it sold approximately 390 million shares of Apple stock during the second quarter. That’s on top of the 115 million sold in the first quarter of 2024. That lowers Apple’s percentage of the Berkshire equity portfolio from over 40% to 28.3%. It also lowers Berkshire’s ownership stake to 2.3%.
Interestingly, Berkshire’s cash received for selling these shares wasn’t immediately reinvested, so the equity portfolio has dropped to $300.2 billion from over $400 billion before the Apple trades were made public.
While Buffett wanted to reduce the company’s reliance on Apple stock, it still owns nearly 400 million shares. The next biggest contributor to its equity portfolio is Bank of America (NYSE:BAC), which accounts for 11.9%.
There are other Warren Buffett stocks to sell. Here are my three candidates from the 46 names held by Berkshire Hathaway.
Occidental Petroleum (OXY)
Occidental Petroleum (NYSE:OXY) is Berkshire’s sixth-largest holding, accounting for 5.0% of its equity portfolio. The holding company owns nearly 29% of the oil and gas producer. In addition to oil and gas, it has a large chemicals operation and a midstream and marketing business that purchases, markets, gathers, processes, transports and stores oil, natural gas, natural gas liquids, and other energy sources.
The company’s shares have not done well in the past year, down more than 8%, considerably less than the nearly 18% gain of the S&P 500. Worse still, Berkshire’s fifth-largest holding is Chevron (NYSE:CVX). It owns almost $18 billion in CVX stock, good for 6.7% of Chevron’s stock, accounting for 5.9% of its equity portfolio, which has also been down a similar amount over the past year.
In the 2023 annual shareholder letter, Buffett argued why it owns OXY. While I understand the desire to own a big chunk of America’s energy resources, why own both companies?
Of the two, Chevron is the superior long-term investment, with or without Oxy’s warrants.
Kraft Heinz (KHC)
Over the years, I’ve vacillated between being bullish and bearish on Berkshire’s investment in Kraft Heinz (NASDAQ:KHC). They’ve barely moved over the past 12 months, up less than 2%.
As of the end of 2023, Kraft Heinz’s carrying value was $13.23 billion, $1.2 billion higher than its fair or market value as of Dec. 31. That means it hasn’t gotten a return yet from the original price paid for its stake in the maker of Heinz ketchup. On the plus side, it did receive $521 million in dividends from the company in 2023 and every year before that.
Eventually, dividends might pay for its investment because it doesn’t appear capital appreciation will do it. Over the past five years, KHC shares have gained 32.3%. Weirdly, that’s better than many of its competitors, including Mondelez International (NASDAQ:MDLZ) and General Mills (NYSE:GIS). Still, I don’t think that’s a reason to hang on to a significant investment.
Kraft Heinz is Berkshire’s seventh-largest holding, accounting for 3.8% of its equity portfolio and representing a 26.9% stake.
I can think of several companies worth owning nearly 30% of. KHC isn’t at the top of the list.
Mastercard (MA)
Mastercard (NYSE:MA) is Berkshire’s 20th-largest holding, valued at $1.81 billion, accounting for 0.6% of its equity portfolio. Visa (NYSE:V) is Berkshire’s 18th-largest position at 0.7%.
In June, I recommended Mastercard as one of three fintech stocks to own to ride the ongoing desire by investors and consumers for more fintech innovation. I like it.
However, I don’t understand owning both companies’ stocks. While their businesses have slight differences, they are interchangeable proxies for the global fintech expansion.
Mastercard has outperformed Visa in 2024, the past 12 months, and over the past five years. I wouldn’t see a problem with Buffett selling Visa and keeping Mastercard. However, the holding company’s slightly higher investment in Visa suggests it’s somewhat more comfortable with Visa.
I don’t think there’s an incredible need to own not one but two massive financial payment companies that have underperformed for most of the past decade.
But then again, I’m writing about stocks while Buffett has $300 billion to invest. He probably knows a thing or two that I don’t.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.