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Warren Buffett Keeps Outperforming Markets; Replicate His Strategy With This ETF

By (Tezcan Gecgil/ )ETFsMay 24, 2022 02:03
Warren Buffett Keeps Outperforming Markets; Replicate His Strategy With This ETF
By (Tezcan Gecgil/ )   |  May 24, 2022 02:03
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Wall Street keenly follows Warren Buffett’s investment strategy. Each quarter, Berkshire Hathaway (NYSE:BRKa) (NYSE:BRKb), where Buffett is the CEO, discloses current holdings to shareholders. And investors—whether retail or institutional—pay close attention to what the "Oracle of Omaha" is buying...and selling.

Amid this year’s red-hot inflation, ongoing interest rate hikes, and current stock market rout, investors are paying even sharper attention to what Buffett is up to.

Many Buffett fans hold shares of BRKb for the long run. The stock is up almost 4% so far in 2022. By comparison, the S&P 500 has lost 16.6%

BRKb Weekly Chart
BRKb Weekly Chart

Well-known for being “greedy when others are fearful,” Buffett has gone shopping in Q1 and opened positions in several new holdings. One of the most notable was Citigroup (NYSE:C).

According to the most recent 13F filings with the US Securities and Exchange Commission (SEC), Berkshire Hathaway had a portfolio value of over $363 billion at the end of Q1, a 10% increase from $331 billion in the previous quarter. Let’s take a closer look.

Warren Buffett Stocks

The InvestingPro tool provides access to various Warren Buffett stocks that can appeal to long-term investors. For instance, the largest holdings in Berkshire Hathaway’s investment portfolio include Apple (NASDAQ:AAPL), Bank of America (NYSE:BAC), and American Express Company (NYSE:AXP). These three names comprise well over 60% of all holdings.

Among the large-capitalization (cap) stocks, we see Apple, Amazon (NASDAQ:AMZN), Visa (NYSE:V), Procter & Gamble (NYSE:PG), and Coca-Cola (NYSE:KO).

With regard to fast-growing businesses, we have the data platform Snowflake (NYSE:SNOW); energy giant Chevron (NYSE:CVX); and chemicals group Celanese (NYSE:CE).

Meanwhile, those looking for undervalued shares may want to research the home furnishings retailer RH (NYSE:RH); General Motors (NYSE:GM); energy group Occidental Petroleum (NYSE:OXY); Charter Communications Technologies (NASDAQ:CHTR), which provides broadband connectivity iacross the US; PC and printer giant HP (NYSE:HPQ); and Citigroup.

Several Buffett stocks, including Snowflake, RH, Amazon, and General Motors, also have bullish analyst targets, meaning they could see higher prices in the months ahead.

Meanwhile, shares with low price-to-book (P/B) ratios may also deserve readers’ attention. For instance, Citigroup; General Motors; media giant Paramount Global (NASDAQ:PARA); Bank of New York Mellon (NYSE:BK), and Kraft Heinz (NASDAQ:KHC) stand out in that category.

Finally, passive income seekers may want to research dividend-paying shares, including Store Capital (NYSE:STOR), Citigroup, Kraft Heinz, and US Bancorp (NYSE:USB).

Picking stocks appropriate for long-term portfolios requires research which may prove difficult for most retail investors. For those who want to replicate Buffett’s strategy, one of the easiest ways may be to buy BRKb stock.

Others may also consider researching an exchange-traded fund (ETF) that offers exposure to several stocks held by Warren Buffett.

Invesco S&P 500 Top 50 ETF

  • Current Price: $299.21
  • 52-week range: $285.96 - $374.77
  • Dividend yield: 1.18%
  • Expense ratio: 0.20% per year

Our fund today, the Invesco S&P 500 Top 50 ETF (NYSE:XLG), provides access to 50 of the largest companies in the S&P 500. The fund was first listed in May 2005.

XLG Weekly Chart
XLG Weekly Chart

Concerning sectors, we see information technology services (37.5%), health care (15.4%), communication services (14.5%), and consumer discretionary (12.1%), among others. The top 10 stocks in the portfolio comprise roughly half of $2 billion in net assets.

Apple; Microsoft (NASDAQ:MSFT); Amazon; Alphabet (NASDAQ:GOOGL); Berkshire Hathaway; Tesla (NASDAQ:TSLA); and Johnson & Johnson (NYSE:JNJ) are among the leading businesses on the roster.

In early January, XLG hit a record high. However, it saw a 52-week low on May 20. Year-to-date (YTD), it has lost almost a fifth of its value. The ETF is also down 3.3% over the past 52 weeks.

The fund’s price-to-earnings (P/E) and P/B ratios are 23.25x and 5.58x. Potential investors who believe that the leading names on Wall Street could soon start to recover should keep XLG on their radar screen.

Interested in finding your next great stock or ETF idea? InvestingPro+ gives you the chance to screen through 135K+ stocks to find the fastest growing or most undervalued stocks in the world, with professional data, tools, and insights. Learn More »

Warren Buffett Keeps Outperforming Markets; Replicate His Strategy With This ETF

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Warren Buffett Keeps Outperforming Markets; Replicate His Strategy With This ETF

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