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I can't believe I'm saying this, but 2022 is finally here. And what did this year bring with it ? Okay, first of all, incredibly high prices in the stock market, actually a 13- year period of a " bull" market. Secondly, inflation has increased almost fivefold in one year. And third, the economy has more debt than ever before after the pandemic.
Everywhere you look, there is bad news, all bad news. And it can be difficult to figure out what to do with your money. What should we invest in? And one person I like to turn to when trying to answer this question is Warren Buffett, known as one of the greatest investors of all time. What is he investing in this year in these pretty crazy times?
So, Buffett's biggest position by a huge margin is a very, very well-known company. I'm sure you've heard of it— Apple. By the way, when I say "Buffett," I mean Berkshire Hathaway—the investment company he runs and in which his fortune is concentrated. So, Buffett owns 887 million Apple shares, which is 42.78% of his stock portfolio.
And just to be clear, we'll start with his publicly traded stock portfolio, okay? So, the total value of his stake in Apple is $125 billion. This is simply an incredible position. It is four times larger than his next largest asset. Buffett began buying Apple shares back in May 2016 at a price of about $23 per share and continued buying until the first quarter of 2018.
To date, the price has increased by about four to eight times since the purchase, and Buffett has not sold them. He still has them, and they are definitely his greatest asset. The second largest position belongs to America's second largest bank, namely Bank of America. It's a little hard to pronounce.
So, Warren Buffett owns $42 billion worth of Bank of America shares , which is 14.6% of his total portfolio. These shares are traded on the New York Stock Exchange under the ticker BAC if you would like to purchase them. So, Buffett bought Bank of America shares by exercising a warrant that had an exercise price of $7.14.
Then he also increased his stake by 30% in the third quarter of 2018 at a price of around $30. So, that gives him a total cost of Apple stock of $14. Now, let's look at today's stock price—it's $46 per share. So, Buffett made a very good profit. The P/E ratio is now pleasantly low compared to the market at 13.8, and they pay a small dividend with a yield of 1.89%.
American Express, a credit card company, is third in Buffett's portfolio. Its value is $45.4 billion. He owns 150,000 shares, which is 8.66% of the total portfolio. The stock itself is very valuable, which is quite typical of Buffett's choices. The price is $173, and the P/E ratio is quite low for this market—18.1.
The stock also has a small dividend yield of 1%. And if you look at the intrinsic value analysis from GuruFocus, it is about $214 per share. So, based on this, it is being sold at a discount. Now let's move on to Coca-Cola, one of Buffett's favorite investments. I remember an interview where he said he would never sell Coca-Cola shares.
They make up 7.15% of the stock portfolio worth $20.1 billion . Buffett purchased these shares back in 1988. This means that through these shares, he owns well-known beverage brands such as Fanta, Sprite, Smartwater and a number of other billion-dollar brands. The following action even better shows how interested Buffett is in the food and beverage industry.
He owns $ 11.9 billion worth of Kraft Heinz stock . This is his fifth largest position, accounting for 4.09% of the portfolio. Many still consider Kraft Heinz shares valuable after their price decline over the past couple of years. They have a low market capitalization. They have a high dividend yield of 4.4% and an acceptable P/E ratio of 19.5.
So , Warren Buffett's sixth, eighth, and tenth largest positions are banking and financial stocks. This means that five of its ten largest stocks are owned by banks or financial companies . In sixth place is the financial company Moody's, worth $8.7 billion, which is 3 % of the portfolio. In eighth place is US Bancorp worth $7.5 billion (2.5%), and in tenth is Bank of New York Mellon worth $3.7 billion (1.3% of the portfolio) .
So, the sector in which Buffett actively invested in 2022 is banking and financial services. You may ask why . This is a valid question. There are several key reasons for this. First, you want to own shares in companies that others need to do business and keep the economy running. That's what banks are for.
It's also worth remembering that Buffett likes to buy assets when everyone around him is scared and panicking. And he did it with the banking sector . American Express, Bank of America, Goldman Sachs were Buffett's landmark investments after the crash, generating large profits. So the non-banking stock that we missed is Verizon, the wireless company.
Its value is 8.5 billion, which is equal to 2.92% of the portfolio. Next comes DaVita Healthcare in ninth place, worth $4.2 billion or 1.4% of the portfolio. These are the 10 largest positions Buffett owns as of early 2022. General Motors and Charter Communications are its 11th and 12th positions with a share of 1.08% and 1.04% of the portfolio, respectively.
And the remaining shares he owns have a stake of less than 1% each. I won't show all of these very small, insignificant positions, but among those that look interesting is Amazon—an e-commerce giant that has shown impressive growth over the past few years. Berkshire also acquired Snowflake, which is a very different investment than the ones Buffett typically chooses.
First, the company recently went public, and Buffett usually avoids IPOs, but not this time. And secondly, it is a cloud storage company. This is atypical of Buffett's investments. So that tells me that it must have been someone else at Berkshire who bought it . Kroger is another of Buffett's smaller holdings.
This proves once again how much he loves retail and food companies. Next, Visa is another small position, accounting for 0.7% of the portfolio. It is again increasing its share in the financial sector of the market this year. And if you break down his portfolio by sector, the largest is the technology sector with a share of 43.2%.
Wait, what? Warren Buffett and technology? This is somehow illogical. No, but remember that Buffett's biggest position is Apple, a technology company. That's where such a high percentage comes from. The second largest is the financial services sector—31.7%, and we've already discussed all of Buffett's financial stocks and the reasons for his love of this sector.
The third largest sector is consumer staples with a rate of 12.7%. These are all his food and beverage companies, like Coca-Cola, Kraft Heinz, Kroger, etc. So what can we learn? Buffett buys what he understands. He understands food, consumers, and this side of the market. He understands banks, he understands all the intricacies of financial services.
And he understands Apple stock, which is essentially a consumer business. He sticks to what he knows, and we should do the same . If we understand technology and the Internet, pay attention to stocks in these sectors. If you know about cars, look at Ford, Tesla, or Toyota stocks, etc. If you are into the topic of beauty and cosmetics, which companies are dominating and growing in this sector?
The lesson we can learn from Buffett is to invest in the areas we know and love. So, I just showed you his public stock holdings, which he is required to disclose by law. However, we must realize that Buffett also owns many private businesses. For example, Buffett owns 100% of the insurance company Geico.
He owns 100% and 99% of the confectionery companies See's Candy and Dairy Queen, respectively. He owns 80% of Nebraska Furniture Mart. He purchased the BNSF railroad company in its entirety for $34 billion. He also owns Duracell, a battery company. So, Buffett's portfolio is mixed: it includes both private companies and public stocks.
And in general, as we've seen, Buffett likes to own simple companies. Food companies, railroads, furniture stores, batteries—those whose business models he easily understands. Another important thing I want to show you is Buffett's balance between cash and stocks this year. So, overall, including both his public stocks and private businesses, he has invested $310.7 billion.
Next, if we look at the cash he has, he has a lot of it. This amounts to 144.2 billion in cash and cash equivalents. By the way, most of this amount is in short-term treasury bills. So, this means that 32% of his total portfolio is cash, and the other 68% is businesses. That's a pretty high percentage of cash, especially for Buffett.
He usually prefers buying stocks over holding cash, which does n't really grow. It is simply "eaten up" by inflation. But in this market where everything is so expensive, it's hard for him to find profitable investments, so he's playing it safe. And here's what Buffett owned in 2022. Lots of banking stocks, lots of consumer stocks.
He invests very patiently. He didn't buy much last year. He's letting his cash accumulate, and I think he's waiting for stocks to get cheaper before he actively invests again.
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