Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) recently released its full-year operating results and capped off another excellent year for investors. The stock finished the year up 25.5%. Since Warren Buffett became CEO six decades ago, Berkshire has delivered nearly 20% compounded annually to investors.
This stellar long-term performance is why investors closely monitor Berkshire Hathaway's investment portfolio. Every quarter, the Securities and Exchange Commission (SEC) requires institutional investors with over $100 million in assets under management to file Form 13F, which discloses their investment holdings.
While Berkshire has trimmed several of its stock positions over the past year, it continues to hold on to some of its best performing stocks. Here are three Buffett stocks that could make an excellent addition to your long-term portfolio today.
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American Express
American Express(NYSE: AXP) has carved out a place as consumers' go-to card thanks to its strong branding and marketing. Since it first entered the credit card market in the 1950s, the credit card company has positioned itself as a premium offering that customers often associate with luxury and decadence.
Over the decades, American Express has attracted high-earning, high-spending customers with its invite-only Centurion Card (Black Card). This card is the ultimate signal of luxury, reportedly requiring a quarter of a million dollars in annual spending and commanding an annual fee of $5,000. Its Platinum Card is a more affordable option, with a $695 annual fee, and rewards high-spending consumers with perks like airport lounges, travel rewards, and credits for dining and entertainment.
The company earns interest income from its credit card loans. Also, it collects a small fee for every transaction through its network, helping it benefit from periods of growing consumer spending alongside an expanding economy. This, coupled with its recognizable brand, is why Berkshire Hathaway invested in the company in the 1990s and continues to hold its shares today, making it one of Berkshire's longest held investments in its stock portfolio.
Last year was another excellent one for the company, which grew revenue by 10% to $74 billion while earnings per share (EPS) surged 25% to $14.02. The stock recently fell after CFO Christophe Le Caillec guided down earnings growth for the first quarter. However, the recent weakness in the stock looks like a solid buying opportunity for long-term investors.
Moody's Corporation
Moody's(NYSE: MCO) is another stock that has been a part of Berkshire Hathaway's portfolio since it spun off from Dun & Bradstreet in 2000. Moody's is the second largest credit rating agency in the United States, behind only S&P Global.
Because of the high barriers to entry, Moody's enjoys a significant competitive advantage. Not only do regulations make it hard to break into credit ratings, but all of the major credit rating agencies (including Fitch Ratings, the third largest in the U.S.) have built up their businesses and reputations over a century or longer.
Moody's benefits from the ongoing growth of public and private debt, which requires their expertise in credit ratings to help investors manage their risks effectively. In the past few years, rising interest rates have put pressure on corporate debt issuance, weighing on one of Moody's primary sources of revenue.
Despite this, the company has performed well thanks to its Moody's Analytics segment, which provides risk-related data and analytics. With its high retention rates and a subscription-based revenue model, this segment helps offset weakness in its credit ratings business and provides a steady income stream.
Moody's continues to grow steadily and has an excellent operating margin of around 42%. The company continues to reward investors through dividends and share buybacks, and is a stellar Buffett stock to hold on to for the long haul.
Chubb
Chubb (NYSE: CB) is one of Berkshire Hathaway's more recent stock additions in the past couple of years, with the conglomerate adding 27 million shares in late 2023 and early 2024. The company had accumulated this position over several quarters, keeping its purchase confidential so as not to tip its hand to investors.
Chubb is a large multinational insurance company with a global reach. The company's coverages include property, casualty, professional liability, cybersecurity, environmental, marine, and general liability.
What makes Chubb stand out is its ability to balance risk and price its policies appropriately to earn an underwriting profit consistently. Over several decades, the company has consistently outperformed peers in underwriting profitability, which is a big reason it has grown its dividend payout for 31 consecutive years.
Another benefit to owning Chubb is its ability to capitalize on today's higher interest rate environment. Chubb has a significant investment portfolio of $150 billion. With interest rates today higher than in the previous decade, Chubb can enjoy increased yields on its fixed-income investments, contributing to its overall profitability. Last year, Chubb earned $5.9 billion in net investment income, an increase of 20% from 2023.
Chubb has a proven track record of underwriting discipline and is well positioned to grow alongside an expanding economy or inflation, should it persist. The company's global reach, pricing power, and significant investment portfolio make it another excellent Buffett stock to hold on to for the long haul.
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American Express is an advertising partner of Motley Fool Money. Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Moody's, and S&P Global. The Motley Fool has a disclosure policy.
