These 6 Stocks Are Why Warren Buffett Beat the Market in 2022

The S&P 500 it appears to be on track to end the year down 20%. Many if not most investors have also seen their portfolios plunge in 2022, but not Warren Buffett.

Most of Buffett’s personal fortune is invested in Berkshire Hathaway (BRK.A 1.02%) (BRK.B) 1.25%). Although there are still a few days left in December, Berkshire appears to be in excellent shape to turn a positive, albeit small, annual profit. In such a dismal year for the broader stock market, Berkshire’s performance looks fantastic.

What is the secret of this success? These six stocks are why Buffett beat the market in 2022.

feeding a profit

If you look at a list of top actions in the S&P 500 this year, the energy sector will be well represented. Not surprisingly, a couple of oil stocks helped boost Berkshire’s returns this year.

1. Chevron

Chevron (CLC 3.09%) constitutes 9.3% of Buffett’s portfolio, making it Berkshire’s third-largest holding. Buffett has added to the position at Chevron throughout the year. And he has paid off handsomely: The shares are up close to 50% in 2022.

2. Occidental Petroleum

There is another oil stock that Buffett has bought even more aggressively this year. Berkshire now owns 21.4% of Western Petroleum (OXY) 3.48%). That bet could be much higher. In August 2022, Berkshire obtained regulatory approval to acquire up to 50% of Occidental. The stock ranks as Buffett’s biggest gainer this year, with a gain of nearly 120%.

Long time favorites

Buffett hasn’t always been so enthusiastic about oil stocks. However, he has been a fan of consumer staples stocks for decades. Two of the legendary investor’s longtime consumer favorites have performed well in 2022.

3. Coke

Coca Cola (what 0.76%) it is Berkshire’s fourth largest holding and represents 8% of the total portfolio. Buffett loves the company’s products and claimed several years ago that he drinks at least five cans of Cherry Coke or Diet Coke every day. He also really liked this year’s actions. Coca-Cola shares are up 7% while the broader market has plunged.

4. Kraft Heinz

Berkshire Hathaway owns 26.6% of kraftheinz (SCIENCES 0.40%). That’s such a high level that the food and beverage company is listed among Berkshire’s subsidiaries on its website. However, Kraft Heinz holds the seventh largest position in the conglomerate’s portfolio, behind other companies that are not considered de facto subsidiaries. It has generated a solid 12% profit for Berkshire in 2022.

Playing games

Buffett is known to regularly play bridge, often with his friend Bill Gates, co-founder of Microsoft. The Oracle of Omaha has never expressed a desire to play video games, but it is certainly very interested in a video game manufacturer.

5. Activision Blizzard

Berkshire initiated a position in Activision Blizzard (ATVI 0.33%) before Microsoft announced plans to acquire the company. It is now the 10th largest holding in Berkshire’s portfolio. The decision to buy Activision shares has given very good results. The stock is up about 14% this year and could go higher if the Microsoft deal doesn’t go off the rails.

The one we can’t let go of

The five stocks listed above aren’t the only ones Buffett owns that have generated positive returns this year. However, the others represent less than 1% of Berkshire’s portfolio. As such, they didn’t contribute as much to Buffett’s beating the market in 2022. There’s one stock we definitely can’t leave out, though, which is not one of Berkshire’s equity positions.

6. Berkshire Hathaway

This stock is Berkshire Hathaway itself. Chevron, Occidental, Coca-Cola, Kraft Heinz and Activision Blizzard definitely helped Buffett maintain his market-beating form this year. But Berkshire’s core businesses also played an important role in this success.

Buffett refers to Berkshire’s core businesses as its “giants.” These include the company’s insurance operations, its BNSF railroad, and Berkshire Hathaway Energy. (Apple is the “giant” where Berkshire is not the majority owner). These units continued to perform well in 2022 with strong revenue gains reported in the first three quarters of the year.

The best-performing stocks for Buffett in 2023 could be quite different from those listed in 2022. However, if Berkshire’s core business continues into the new year, there’s a good chance Buffett will beat the market again.

keith spights he has positions at Apple, Berkshire Hathaway and Microsoft. The Motley Fool ranks and recommends Activision Blizzard, Apple, Berkshire Hathaway, and Microsoft. The Motley Fool recommends Kraft Heinz and recommends the following options: long January 2023 $200 calls at Berkshire Hathaway, long January 2024 $47.50 calls at Coca-Cola, long March 2023 $120 calls at Apple, short January 2023 $200 options on sale at Berkshire Hathaway, short January 2023 calls for $265 at Berkshire Hathaway, and short calls for March 2023 $130 at Apple. The Motley Fool has a disclosure policy.

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