Sometimes finding fresh investing inspiration can be a challenge, but if you examine billionaire Warren Buffett’s moves, you can find insights from one of the world’s most successful fund managers.
Buffett is many things — a high profile proponent of value investing, a legendary philanthropist and owner of over 60 companies. Now, the “Oracle of Omaha” as he is known, has revealed the fourth-quarter trades of his $191 billion Berkshire Hathaway Inc fund.
The result: a valuable glimpse into which stocks Buffett likes, and which he doesn’t. Bear in mind that the 13F forms filed with the SEC reveal trades made in the last quarter rather than the current quarter, so it is possible that the fund’s positions have since changed. Nonetheless, his moves are still carefully tracked by investors around the world.
Here we also include TipRanks’ stock insights from Wall Street’s best-performing analysts. Does the Street sentiment match Buffett’s latest trades? We look at the outlook on these stocks from the best-performing analysts on Wall Street. These are the analysts that consistently outperform the market with the highest success rate and average return.
Let’s delve in now:
Apple shares spiked higher on the news that AAPL is now Buffett’s largest investment. Following a 23% increase of AAPL shares, Buffett now holds $28 billion of AAPL stock. This is about 14.6% of the total portfolio. According to Time, Buffett explained that: “Apple strikes me as having quite a sticky product and an enormously useful product to people that use it, not that I do.”
And Morgan Stanley’s Kathryn Huberty also echoes Buffett’s bullish Apple stance. After examining China’s smartphone stats, she reiterates her buy rating with a $203 price target (18% upside potential). Despite tough competition from local Chinese brands, she believes that “a rising retention rate and a switching rate above peers shows that Apple platform share gains can still accelerate as the market matures.”
“With over 1⁄3 of the Apple installed base in China still owning an iPhone 6 or older model compared to 20% that owned an iPhone 5S or older a year ago, there remains significant untapped potential for continued upgrades/share gains.” (To watch Huberty’s track record, click here)
Overall, we can see from TipRanks that analysts are cautiously optimistic on AAPL right now. With an average price target of $193.52, the Street is predicting AAPL can soar nearly 13% from current prices in the coming months.
Teva Pharmaceutical Industries Ltd (ADR)
Buffett’s most famous investment advice is “be fearful when others are greedy and greedy when others are fearful.” He appears to be living by that motto when it comes to flailing pharma giant Teva Pharmaceutical. He snapped up 19 million shares in TEVA, worth about $358 million.
There is no doubt that this is a risky move. Teva is currently one of the most-shorted stocks on the market and has just begun a restructuring program to deal with its massive $35 billion debt burden. However, given that shares are trading at just $20 vs the 5-year peak of over $70, perhaps this will turn out to be a bargain buy for the Oracle of Omaha.
TipRanks shows TEVA has a Hold analyst consensus rating- with an average analyst price target that suggests 7% downside from the current share price.
However, five-star Mizuho analyst Irina Rivkind Koffler calls the stock a Buy. She sees the stock leaping by 10% to $23 in the coming months and says: “We expect slow but gradual appreciation in TEVA shares. While the 2018 outlook introduced on the 4Q:17 call came in below expectations, we believe there is downside protection, and even longer-term upside to the stock.” (To watch Koffler’s track record, click here)