buffett’s q2 picks: value stocks highlight

Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, made some notable stock purchases in the second quarter of 2024. Buffett’s investment strategy involves buying stakes in well-established companies with clear competitive advantages and strong management teams. He is known for holding onto positions for years, if not decades. In Q2, Buffett initiated new positions in two companies. He bought 1.04 million shares of Heico, an aerospace and electronics company, and over 690,000 shares of Ulta Beauty, a cosmetics retailer. One of Buffett’s most significant moves was acquiring an additional 7.26 million shares of Occidental Petroleum, making it Berkshire Hathaway’s sixth-largest holding. Buffett has mentioned that he expects to own a stake in Occidental “indefinitely.” Buffett also increased Berkshire’s position in the insurer Chubb by nearly 4.3%, adding 1.11 million shares. Chubb now ranks as Berkshire’s ninth-largest holding. In addition, Buffett purchased shares of Liberty SiriusXM Group and Sirius XM Holdings. He acquired 2.43 million shares of Liberty SiriusXM Group Class A and 4.52 million shares of Liberty SiriusXM Group Class C. Buffett also bought 96.2 million shares of Sirius XM itself, significantly boosting Berkshire’s stake in the satellite radio and podcast company. Value investors might find several of Buffett’s Q2 purchases attractive. Ulta Beauty has a forward earnings multiple of 16.3, which is lower than the S&P 500’s multiple of 21.5. Sirius XM trades at just under 12 times forward earnings, while Chubb’s forward earnings multiple is 11.9. Occidental Petroleum is even cheaper, trading at 11 times forward earnings.

Buffett’s notable Q2 acquisitions

Among Buffett’s Q2 buys, Occidental Petroleum stands out as a top choice for value investors. Along with its low valuation, Occidental is investing in direct air capture technology to remove carbon dioxide from the air. If successful, this could position the company as a major winner in the coming years. Despite these notable purchases, Buffett’s favorite stock remains Berkshire Hathaway itself. Over the past 24 quarters, Buffett has consistently bought back Berkshire shares, investing nearly $78 billion in the process. This amount is larger than the market cap of 379 companies within the S&P 500. Buffett is a big fan of buybacks because they incrementally increase the ownership stakes of patient investors. As the outstanding share count declines, each remaining share holds a fractionally larger stake in the company. Buybacks also tend to make most time-tested businesses more fundamentally attractive to investors. For those looking to follow Buffett’s investment strategy, some options include investing in Heico-heavy exchange-traded funds (ETFs) like the TCW Compounders ETF or the SPDR S&P Aerospace & Defense ETF (XAR). Investors may also consider Occidental-heavy ETFs such as the Texas Capital Texas Oil Index ETF (OILT) and the First Trust Nasdaq Oil & Gas ETF (FTXN). While Buffett might be bullish on companies like Occidental Petroleum and Chubb, his most beloved stock remains Berkshire Hathaway. As the Oracle of Omaha continues to buy back shares and invest in well-established companies, many investors will be watching closely to see where he places his bets next.