Warren Buffett is generally considered to be the best investor of modern times. After all, becoming the world’s richest man on paper lends itself to credibility and it probably means he knows a thing or two. Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-A) now own what was nearly $130 billion in common and preferred stock of U.S. public companies.
The year 2016 is turning out to be an unusual year. We had a mini-crash at the start of the year for almost seven weeks, followed by an immediate snapback recovery as Japan and Europe went deeper into quantitative easing and negative interest rates.
Investors often love watching the top stocks and new additions and deletions from Buffett’s top stock holdings each quarter. It is always amazing to see that some of Buffett’s stocks do exceptionally better than the market and others do considerably worse.
As of Wednesday, July 6, the Dow Jones Industrial Average was up 3.7% and the S&P 500 was up 3.3% so far in 2016. Berkshire Hathaway itself was up 7.6% year to date in the A-shares.
24/7 Wall St. wanted to take a look at the top five positions in the Buffett holdings that were the worst year-to-date performers. This does of course include preferred stakes if convertible, but it screens out the positions that are very small or that have no size at all. Brief color and commentary has been added on each position.
Bank of America
Bank of America Corp. (NYSE: BAC) is down almost the same amount in 2016 as it was a year ago: −23.76% at the end of 2015 and −23.79% since this time a year ago. It is important to keep in mind that Buffett’s stake here is a post-recession convertible preferred equity stake, so Buffett’s price may not be down this much if those securities were assigned a market value. That being said, this certainly impacts the value, and it was a whopping $5 billion investment that is still worth far more now.
The bank’s common stock most recently closed trading at $12.86, with a consensus analyst price target of $17.33 and a 52-week trading range of $10.99 to $18.48. Bank of America did just get back to a normalization of its capital returns from the Federal Reserve stress tests of 2016.
The Goldman Sachs Group Inc. (NYSE: GS) has seen a total return of −19.17% in 2016, and shares have seen a return of −29.5% from a year ago. Buffett owns this stake of more than 10.9 million shares after converting preferred shares bought at a better price than the government bailout money during the recession. It also used to be a stake of 12.63 million shares, but the current value for the stake is almost $1.6 billion.
Goldman Sachs shares closed trading at $145.58, in a 52-week range of $138.20 to $214.61. Its market capitalization rate is almost $64 billion and the consensus analyst price target is $181.41.