Warren Buffett’s fortune: how the billionaire built his fortune

Warren Buffett is considered by many to be the greatest investor of all time. When he started his own business in the mid-1950s, investors only entrusted him with $100,000 (about $1 million today) of their capital. Over the past 70 years, he has turned this capital into a conglomerate with just under $1 billion in assets.

Buffett began investing when he was 11, buying six preferred shares of Cities Service (three shares for himself and three for his sister) for $38 per share. He made a small profit on this investment and went on to establish several other businesses.

He filed his first tax return at just 13 years old. This was for the calendar year 1944. He had earned $592.50 in total, more than half from a paper tour, the rest from investments. (He paid $7 in taxes).

The young businessman attended the University of Nebraska before moving to Columbia University, where he met his mentor, Professor Benjamin Graham.

Graham essentially wrote the book on value investing and he also ran his own investment firm, which the younger Buffett joined when he left college. Sadly, Graham ended the business a few years after the young entrepreneur arrived, and he was soon back home in Omaha.

Soon after, a group of family and friends asked Buffett to invest their life savings in the stock market. The Buffett Partnerships, as they were called, earned an annual return of 31.6% before fees from 1957 to 1968, compared to 9.1% for the Dow Jones Industrial Average. Buffett used an investment strategy similar to that pioneered by Graham.

Warren Buffett’s portfolio and the rise of Berkshire Hathaway

Buffett began buying Berkshire Hathaway stock for his partners’ portfolios in the early 1960s. At the time, Berkshire was a struggling textile company. Its peers had a much lower cost base, allowing them to undercut the company on price. As the losses mounted, the market value of the company fell below the value of the assets on its balance sheet.

The investor wanted Berkshire to start shutting down its manufacturing facilities and return the money to its shareholders, which would have produced a large, risk-free return for all of its shareholders. However, the management of Berskhire refused to follow his plan – therefore Buffett decided to take control of the company himself.

Buffett has used Berkshire’s capital to buy out other businesses, mostly companies in the insurance industry. In 1967 he bought the Omaha-based insurer National Indemnity Company for $8.6 million, which gave him his first foothold in the industry. Not only was National Indemnity a profitable and well-managed insurer, but it also had an investment portfolio, a valuable source of capital.

Today, Berkshire Hathaway has more than 60 subsidiaries, employing more than 300,000 people. It owns insurer Geico, battery maker Duracell, restaurant chain Dairy Queen, BNSF, one of the largest railroads in the United States, and utility giant Berkshire Hathaway Energy, all backed by of a $300 billion equity portfolio.

Warren Buffett’s Net Wealth Surpasses $100 Billion

At the same time, Buffett built himself a huge fortune. He is the fifth richest person in the world (the exact position fluctuates but he is usually in the top five) with a net worth of $112 billion.

Almost all of Buffett’s wealth is tied to shares of Berkshire Hathaway. Since he took control of the company in 1965, shares have returned 20.1% annually compared to 10.5% for the S&P 500.

The best stocks in Warren Buffett’s portfolio

Buffett’s investment style can be defined by one of his most famous quotes, “Rule no. 1: Never lose money. Rule no. 2: Never forget the first rule.

Since the 1950s, the investor has always sought to find investment opportunities with low risk of failure, but with high potential for return.

Buffett seeks to minimize the risk of failure by sticking to businesses in industries he knows well. “Risk comes from not knowing what you are doing,” as he puts it.

He likes to own businesses with a sustainable competitive advantage, like a well-known brand or substantial economies of scale, and won’t pay more for any business. As a value investor, he prefers to buy when other investors are selling.

In 2008, when the global financial sector was on the brink of collapse, Buffett invested $5 billion of Berkshire’s cash in Goldman Sachs, on extremely favorable terms that an ordinary investor would have been unable to access. The bet eventually netted the conglomerate a profit of over $3 billion. Around the same time, he also invested money in Dow Chemical, Bank of America, and General Electric.

Despite this impressive gamble, Buffett generally doesn’t try to time the market or speculate on the price of securities. He thinks investors should approach buying a stock with the same mindset as buying the whole company. He encouraged others to “own your stock as an investment – just like you own an apartment, a house or a farm – think of it as a business”.

Here are the top 20 stock holdings in Berkshire Hathaway’s stock portfolio (which is managed by Buffett) as reported in late March according to the company’s Regulatory Filing 13F:

Company

Symbol

Assets

Assess

% of portfolio

Apple Inc.

AAPL

911 347 617

$155,564,138,000.00

42.79%

Bank of America Corp

BAC

1,032,852,006

$41,636,348,000.00

11.45%

American Express Company

AXP

151,610,700

$28,351,201,000.00

7.80%

Chevron Company

CLC

159 178 117

$25,918,973,000.00

7.13%

Coca-Cola Co

KO

400,000,000

$24,799,999,000.00

6.82%

Kraft Heinz Co.

KHC

325 634 818

$12,826,755,000.00

3.53%

Moody’s Corporation

MCO

24,669,778

$8,323,829,000.00

2.29%

Western Oil Company

OXY

143 162 392

$7,737,804,000.00

2.13%

American bank

USB

144,046,330

$6,719,111,000.00

1.85%

Activision Blizzard, Inc.

ATVI

74,187,400

$5,152,292,000.00

1.42%

Davita Inc.

ADV

36,095,570

$4,082,770,000.00

1.12%

HP Inc.

HPQ

121 092 418

$3,792,480,000.00

1.04%

Bank of New York Mellon Corp

BK

74,346,864

$3,591,100,000.00

0.99%

Kroger Co.

KR

57,985,263

$3,326,615,000.00

0.92%

Citigroup Inc.

VS

55,244,797

$2,945,319,000.00

0.81%

Verisign, Inc.

VRSN

12,815,613

$2,850,961,000.00

0.78%

General Motors Company

GM

62,045,847

$2,713,886,000.00

0.75%

Paramount Global Category B

PARA

68,947,760

$2,606,915,000.00

0.72%

Itochu Company

ITOCF

81,304,200

$2,330,991,414.00

0.64%

Charter Communications Inc

CHTR

3,828,941

$2,088,764,000.00

0.57%

Liberty Sirius XM C-Series Package

LSXMK

43 208 291

$1,975,915,000.00

0.54%

Visa Inc.

V

8,297,460

$1,840,128,000.00

0.51%

Amazon.com, Inc.

AMZN

533,300

$1,738,531,000.00

0.48%

Aon PLC

AON

4,396,000

$1,431,470,000.00

0.39%

Mastercard Inc.

MY

3,986,648

$1,424,748,000.00

0.39%

Snowflake Inc

SNOW

6,125,376

$1,403,507,000.00

0.39%

Celanese Corporation

THIS

7,880,998

$1,125,958,000.00

0.31%

Liberty Sirius XM A-Series Package

LSXMA

20,207,680

$923,692,000.00

0.25%

McKesson Corporation

MCK

2,921,975

$894,504,000.00

0.25%

Nu Holdings Ltd

A

107 118 784

$826,957,000.00

0.23%

HR

HR

2,170,000

$707,615,000.00

0.19%

T-Mobile Us Inc

TMUS

5,242,000

$672,811,000.00

0.19%

Globe Life Inc

GL

6,353,727

$639,185,000.00

0.18%

Markel Corporation

MKL

424 343

$620,034,000.00

0.17%

Liberty Media Formula 1 Series C

FWONK

7,722,451

$539,336,000.00

0.15%

Capital Corp Store

STOR

14,754,811

$431,283,000.00

0.12%

Ally Financial Inc.

ALLY

8,969,420

$389,990,000.00

0.11%

Soils & Decoration Holdings Inc

FND

4,780,000

$387,180,000.00

0.11%

StoneCo Ltd

STNE

10,695,448

$125,137,000.00

0.03%

Verizon Communications Inc.

VZ

1,380,111

$70,303,000.00

0.02%

Marsh & McLennan Companies, Inc.

CMM

404 911

$69,005,000.00

0.02%

Royal Pharma plc

RPRX

1,496,372

$58,299,000.00

0.02%

Johnson & Johnson

JNJ

327 100

$57,972,000.00

0.02%

Procter & Gamble Co.

PG

315,400

$48,193,000.00

0.01%

Diageo plc

WD

227,750

$41,650,920.00

0.01%

Mondelez International Inc.

MDLZ

578,000

$36,287,000.00

0.01%

Liberty Latin America Ltd Class A

LILAC

2,630,792

$25,518,000.00

0.01%

Vanguard 500 ETF Index Fund

VOO

43,000

$17,852,000.00

0.00%

SPDR S&P 500 ETF Trust

TO SPY

39,400

$17,795,000.00

0.00%

United Parcel Service, Inc.

UPS

59,400

$12,739,000.00

0.00%

Liberty Latin America Ltd Class C

LILAK

1,284,020

$12,314,000.00

0.00%

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