After depot update: Warren Buffett could still have these 20 dividend stocks on his shopping list | message
Shares in this article
Raw materials in this article
Forex in this article
indices in this article
• Old master separates from gold and relies on oil shares
• Successful investors copy the strategy, not the transaction
• Mimicking Berkshire does not necessarily lead to success
Private investors in particular should be very pleased that the US Securities and Exchange Commission (SEC) requires all institutional investors and hedge fund managers with assets under management of over 100 million US dollars to submit a so-called 13F form every quarter. From this form you can see immediately which positions the respective fund or investor had in the portfolio up to a certain key date.
Depot updates regularly cause a stir
Whether Mohnish Pabrai, Carl Icahn, George Soros or Ray Dalio: When the Wall Street professionals let the public take a look at their books, it very often creates copycat effects. Such an impact can always be observed after the 13F publication of Berkshire Hathaway and Warren Buffett’s portfolio. Buffett’s depot update, for example, often leads to increased volatility of the respective securities, usually in the event of major reallocations.
Accordingly, the latest purchases and sales of the star investor were followed by countless free riders, who directed the corresponding shares in a certain direction immediately after the announcement.
When Buffett buys a new stock, many investors prick up their ears
Warren Buffett and Berkshire Hathaway are getting so much trust, primarily from value investors, that new investment positions for the US billionaire are often almost blindly taken over. This also happened after Berkshire Hathaway announced on February 16, 2021 that Verizon and Chevron had two new positions in the portfolio.
The shares in the two dividend stocks climbed by 3 and 3.5 percent at the beginning of the next trading day alone. With the purchase of a total of over 146 million Verizon shares and over 48 million Chevron shares, Buffett left no doubt about his great interest in this context.
Similar effects were also found at AbbVie, Merck, Bristol-Myers Squibb, Kroger and T-Mobile US, as Buffett has significantly expanded his stake in these companies. However, investors who only invest in a company after Berkshire has invested run the risk of chasing the trend over the long term, which inevitably does not have a very positive effect on total returns.
Blind imitation can be expensive
While the papers that Buffett is adding to his portfolio, at the latest after the publication of the 13F form, gain in popularity and thus rise in price, the shares that were sold off by Berkshire are falling.
The fact that it does not necessarily make sense for private investors in particular to completely copy Buffett’s portfolio can be seen, for example, from the Barrick Gold share. When it became known after the second quarter of 2020 that Warren Buffett had acquired a total of around 20 million shares in the Canadian gold mining company, many private investors also began to buy up shares in the company.
The paper of the gold producer, which was still quoted under 16 US dollars in April, was already costing over 26 US dollars at the time of publication. Investors who only bought shares in the gold mine after the Berkshire portfolio was published missed the entire rally. However, it was only announced on February 16, 2021 that Warren Buffett had completely sold the entire position, which was only bought in the second quarter of 2020, by the end of 2020. At this point, however, the stock was trading below $ 22 again.
While Warren Buffett was able to achieve a return of almost 80 percent on the shares in Barrick Gold, provided he bought them in April for around US $ 16 and sold them in November for just under US $ 29, some free riders had to post decent losses. Investors who followed the 13F publications did not buy the shares until mid-August 2020 and then sold them again in mid-February 2021. The price of the gold share did not generate a profit in this time window, but a loss of almost 20 percent.
One step ahead of Warren Buffett
The simple example around the shares of Barrick Gold clearly shows that the mandatory publications of Berkshire Hathaway, due to the enormous
Period of time between purchase or sale and announcement, should always be treated with caution.
As a result, it may make more sense for investors to use the latest stock positions as an opportunity to find other promising companies that have similar metrics and characteristics.
Based on the properties of Verizon and Chevron, a total of 20 companies from more conservative industries can be found in the S&P 500, all of which offer a very high dividend yield, which in turn is completely covered by free cash flow.
Five oil stocks for the Berkshire portfolio
Equivalent to Chevron, ONEOK, Williams, Kinder Morgan, Phillips 66 and Marathon Petroleum could currently be on Warren Buffett’s share buying list. Because all five companies are currently not only benefiting from the increased gas and oil prices, but also offer dividend yields of at least 4.5 percent each.
Whether Buffett will have other oil companies on the buy list after his $ 4.1 billion Chevron stake remains uncertain. However, since even the major bank Goldman Sachs is assuming a new super cycle in the commodities market, the chances are good that Buffett will also acquire more shares from the sector. “Investors looking to invest money for five to ten years can now look to the oil sector. [
] When interest in an industry is only just emerging, as is now the case in the oil sector, it is often worthwhile to rely on the big companies, “said comdirect market expert Andreas Lipkow in an interview with Business Insider.
Eight REITs to Buffett’s taste
High cash flows are currently not only being generated in the oil industry, but also in the US real estate sector. Accordingly, a total of eight REITs (Real Estate Investment Truts) can be found in the S&P 500, which should suit Buffett’s taste. In this context, dividend yields of at least 4 percent are available at Iron Mountain, SL Green Realty, Vornado Realty, Simon Property, Realty Income, Regency Centers, Boston Properties and Federal Realty.
While the current Berkshire portfolio makes it clear that real estate stocks are not necessarily one of Buffett’s favorite investments, this could be in the future
but change without further ado. Because the aforementioned REITs all offer high cash flows that reliably exceed the distributions.
From AT&T to Kellogg – seven other candidates for Buffett
After the extensive investment in the US telecommunications company Verizon, Lumen Technologies and AT&T could now also be on the US billionaire’s shopping list. Both companies currently offer very high payouts and low valuation factors.
It is also possible that the Omaha Oracle will acquire a stake in the specialty chemicals companies Dow and Lyondellbasell in the coming weeks and months. The two S&P 500 stocks are very solidly positioned and offer a high dividend yield in the region of four percent.
In addition to telecommunications and chemistry, the value investment legend may soon also be eyeing the packaging industry. In that context, Buffett’s eye is likely to fall on Amcor and International Paper stocks. In addition to low price-earnings ratios of 15 and 13, both companies offer a distribution yield of around four percent.
Furthermore, the stock of the cereal giant Kellogg should have caught Buffett’s attention by now. Because with a share price of less than 60 US dollars, the Corn Flakes Group not only offers a dividend yield of a good four percent, but also a P / E ratio of less than 15 and a KCV of just under ten.
Buffett’s investment strategy: often copied but never achieved
Basically, investors shouldn’t be wondering which stock Warren Buffett will buy next, but rather which stock they themselves find attractive and profitable. Of course, in this context it makes sense to use the old master’s evaluation methods, but copying Buffett’s orders only every three months with the help of a 13F form is less practical, since the right timing is also very important.
For true Buffett fans, it is most likely more worthwhile to equip their own portfolio with Berkshire Hathaway stocks instead of chasing after Warren Buffett’s orders.
Pierre Bonnet / editors Forex-news.com.net
This text is for informational purposes only and does not represent an investment recommendation. Finanzen.net GmbH excludes any right of recourse.
More news about AT&T Inc. (AT & T Inc.)
Image Sources: Bill Pugliano / Getty Images