Warren Buffett's Berkshire Hathaway owns one of the world's most closely watched stock portfolios. It holds stakes in 46 stocks and exchange-traded funds that are worth $296.8 billion, or 30% of its entire market capitalization.
Investors often follow the conglomerate's portfolio for investment ideas from Buffett himself, but it actually reduced its stakes in many of its top stocks -- including Apple and Bank of America -- over the past year. Berkshire also paused its buybacks for the first time in six years in its most recent quarter.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
Those conservative moves suggest that Buffett thinks stocks are getting overvalued. With the S&P 500 trading at a historically high 25 times earnings, it's tough to counter that argument. But as Buffett prunes his portfolio and halts its own buybacks, we should pay attention to the positions he either expanded or left alone.
Three of those stocks -- American Express(NYSE: AXP), Chubb(NYSE: CB), and VeriSign(NASDAQ: VRSN) -- are still resilient investments that deserve a closer look.
American Express
Buffett initially invested in American Express in 1998, but he hasn't bought or sold any more shares since 2012. That stake is now worth nearly $46 billion. It accounts for 15.5% of Berkshire's portfolio, and is the company's third largest holding.
American Express is a bank, payment processor, and card issuer. That sets it apart from Visa and Mastercard, which only operate payment processing networks and partner with financial institutions to issue co-branded cards.
As a card-issuing bank, American Express takes on more credit risk than Visa and Mastercard. However, it mitigates that risk by only issuing its cards to higher-income customers with healthy credit scores. Amex cards aren't as widely accepted worldwide as Visa or Mastercard, but it's gradually expanding into more international markets.
American Express is a balanced play on interest rates. Lower rates drive more consumer spending and increase its payment processing revenues, while higher rates boost its banking segment's net interest income. That evergreen business model makes it a reliable long-term investment. From 2023 to 2026, analysts expect its revenue and earnings per share (EPS) to expand at compound annual growth rates (CAGRs) of 9% and 15%, respectively. It still looks reasonably valued at 20 times forward earnings, and it pays a forward dividend yield of 0.9%.
Chubb
Buffett loves insurance companies because they generate plenty of cash for Berkshire's investment portfolio. It acquired insurance companies like GEICO, Gen Re, Alleghany, Wesco, and National Indemnity over the past few decades, and its insurance underwriting and investment segments generated 40% of its operating earnings in 2023.
That's why it wasn't too surprising when Berkshire initiated a new position in Chubb -- the world's largest publicly traded provider of property, supplemental, health, and casualty insurance policies -- in 2023. It subsequently bought more shares throughout 2024, and it now owns a $7.3 billion stake in the company. That's 2.5% of its portfolio.
Over the past four years, Chubb consistently grew its consolidated net premiums by double digits, even as the macro headwinds rattled the markets. That's because most customers won't cancel their insurance policies just to save a few dollars.
From 2023 to 2026, analysts expect its revenue and EPS to both grow at a CAGR of 7%. It trades at just 11 times forward earnings and pays a forward yield of 1.3%. That steady growth and low multiple make Chubb a good safe-haven stock.
VeriSign
Berkshire started to invest in VeriSign in 2012. But last month, it increased that stake by 473,500 shares. This boosts its position to 13.3 million shares, which are worth $2.7 billion and account for 0.9% of its portfolio.
VeriSign operates the authoritative domain name registries for two of the internet's most popular top-level domains: .com and .net. It's also the primary subcontractor for the .edu and .jobs domains for non-profit organizations, and it operates two of the internet's 13 "root name servers," which facilitate most online data transfers.
The company's sticky business model seems evergreen, and its control of those crucial domains gives it incredible pricing power in its long-term contracts. But its stock swooned in the first half of 2024 after several politicians and advocacy groups pressed the National Telecommunications and Information Administration (NTIA) and Department of Justice (DOJ) to halt the U.S. government's renewal of its contract for the .com domain.
Those headwinds dissipated last August after the NTIA renewed that crucial deal. Analysts expect its revenue and EPS to grow at steady CAGRs of 3% and 5%, respectively, from 2023 to 2026. It still doesn't look expensive at 23 times forward earnings, so it could be a reliable all-weather stock for your long-term portfolio.
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Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Leo Sun has positions in Apple and Berkshire Hathaway. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, Mastercard, VeriSign, and Visa. The Motley Fool recommends the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy.
