In an unforgettable moment, billionaire Warren Buffett famously characterized Bitcoin as “rat poison squared” at a shareholder meeting held in April 2022. This statement was made when Bitcoin was valued at approximately $40,000. Since then, Bitcoin’s value has significantly declined and currently hovers around $28,700.
Conversely, Berkshire Hathaway’s Class A stock has demonstrated remarkable performance, recently achieving an all-time high, surpassing the impressive milestone of $560,000.
The investment landscape continues to evolve, prompting interest in alternative assets and strategies. Unsurprisingly, Buffett remains steadfast in his skepticism regarding the ongoing digital fascination with Bitcoin. In a recent interview with CNBC, he reiterated his perspective, likening betting on Bitcoin to the act of playing slot machines in Las Vegas. In his words, “We’ve had an explosion of gambling, essentially. And I like to bet on a football game — if I’m sitting and watching, it makes it more interesting. But I don’t think I want to make a living trying to bet against the house.”
Lennar Corp.
Shifting his focus to the investment arena, Buffett appears to be favoring American homebuilders. He initiated a position in Lennar Corporation (LEN) during the second quarter of 2023, as indicated by recent regulatory filings. Lennar, a prominent Florida-based company, ranks among the nation’s largest home builders, positioning it advantageously amidst the ongoing shortage of housing in the United States. The disparity between household formation and housing construction over the years (2012-2022) by a margin of 6.5 million households highlights the potential for a surge in demand for homebuilding.
Notably, Buffett’s investment strategy extends to other homebuilders, with additions of NVR (NVR) and DR Horton (DHI) to his portfolio during the same quarter.
Diageo
Buffett’s diverse portfolio reflects his investment philosophy and his penchant for “sin stocks.” In the first quarter of the year, he acquired a stake in the British alcoholic beverage giant, Diageo (DEO), a company he is no stranger to, having previously held a substantial position in Guinness, a beer brand that would later amalgamate with other brands to create Diageo in the 1990s. In a letter to investors from that era, he compared the investment in Diageo to one of his most famous bets, noting the similarities in how both Coca-Cola and Guinness generated profits across different continents.
Diageo’s return to the Berkshire portfolio suggests that Buffett perceives the company as undervalued. Notably, Diageo’s stock trades at just under 19 times earnings per share and offers a 2.57% dividend yield. This is in stark contrast to Bitcoin, which lacks a dividend yield and a conventional price-to-earnings ratio.
Occidental Petroleum
Furthermore, Warren Buffett’s investment strategy extends to the energy sector, as evidenced by his gradual accumulation of shares in Occidental Petroleum Corp (OXY) over the past year. Currently, Buffett holds a significant stake, controlling over 25% of the company’s outstanding shares. The recent resurgence in crude oil prices, including a recent 10-month high, coupled with expectations of sustained demand, augurs well for commodities, particularly benefiting oil producers like Occidental.
Buffett’s investment in energy giants has become a pivotal aspect of his portfolio. Considering the attractive valuations of these companies, with Occidental’s stock trading at just 11 times earnings, retail investors may find these opportunities worth exploring more closely.