You’ve probably heard of the 80-20 rule. Also called the Pareto Principle. The idea is that about 80% of effects are produced by about 20% of causes. This 80/20 rule applies to a surprising number of scenarios.Case in point, see where Warren Buffett and his team invested Berkshire Hathawayof (BRK.A -0.00%) (BRK.B -0.05%) money.
Berkshire owns shares in 47 companies. (He actually has 50 shares, as some companies have more than one category or series of shares.) The Pareto principle percentage doesn’t exactly apply to Berkshire’s investments, but it’s very close. is. As 2023 begins, 80% of Buffett’s portfolio will be invested in these seven stocks.
1. Apple
apple (AAPL 0.25%) It ranks as Buffett’s largest holding, accounting for 36.8% of Berkshire’s total portfolio (including shares owned by Berkshire subsidiary New England Asset Management). Stocks will plummet in he 2022. As Buffett expands his position at Apple, don’t be surprised if the tech giant is trading at a bargain.
2. Bank of America
Buffett’s love of bank stocks has waned somewhat over the past year or so.But he still remains a fan bank of america (back -0.06%)The stock represents 10.8% of Berkshire’s portfolio (including shares owned by New England Asset Management). BofA’s share price has fallen considerably in 2022, but the big banks should benefit from higher interest rates early in the year.
3. Chevron
chevron (CVX 0.66%) It holds the No. 3 spot with 9.6% of Berkshire’s total portfolio. Buffett has bet heavily on the oil and gas giant — and the bet has paid off so far. Chevron’s stock skyrocketed in his 2022, playing a big role in Buffett’s beating the market.
4. Cola
i loved buffet coca cola (Wh -0.53%) — Both drinks and stock — for decades. Blue chips now make up his 8.1% of Berkshire’s total portfolio. Coca-Cola’s performance fell significantly, but S&P 500 In the last decade, it will beat the major indices in 2022.
5. American Express
american express (AXP 0.29%) It stands out as another long-time favorite of Buffett’s. Seven percent of Berkshire’s total portfolio is invested in financial services stocks. Amex has long been a big winner for Buffett. However, 2022 was the year stocks fell despite outperforming the broader market.
6. Kraft Heinz
Berkshire owns 26.6% stake craft heinz (Science 0.07%)This is enough to make up 4.2% of the conglomerate’s overall portfolio. It is enough for Kraft Heinz to be listed on Berkshire’s website as a subsidiary. Kraft Heinz’s stock, which has generally performed disastrously over the past decade, ranks among Buffett’s winners in 2022.
7. Occidental Petroleum
Occidental Petroleum (oxy 1.14%) 2022 has been a great year. That valuation has more than doubled his. This not only marked Buffett’s best performance of the year, but also made him the biggest S&P 500 winner. Combined with aggressive buying throughout 2022, combined with huge profits, Occidental jumped to Buffett’s No. 7 spot, accounting for 3.9% of his overall. Berkshire’s entire portfolio.
Applying the 80-20 Rule to Buffett’s Top Stocks
Will the Pareto Principle apply to Buffett’s top stocks in 2023, with roughly 20% of them generating 80% of the total return that year? However, I wouldn’t be surprised if one or two of these stocks had exceptional returns in his 2023.
If I had to pick the one with the highest chance of success, Occidental would be at the top of the list. Of all the stocks Buffett bought in his 2022, oil stocks are likely to be his one of his best 2023 bets.
We expect oil prices to remain high and support both Occidental and Chevron. Buffett is also likely to continue to buy more of Occidental stock. Berkshire has won approval to buy up to 50% of oil and gas producers in August 2022. The company probably won’t get that big of a stake. As with the 80-20 rule, the actual percentages may not be exact, but they may be close.
Bank of America is an advertising partner of The Ascent by The Motley Fool. American Express is an advertising partner of The Ascent by The Motley Fool. Keith Speights has held positions at Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool recommends Kraft Heinz Stock and recommends the following options: $265 call at Berkshire Hathaway in 2023, $130 short call at Apple in March 2023. The Motley Fool’s U.S. headquarters has a disclosure policy.