Warren Buffett's 10 Most Profitable Investments of 2017

Berkshire Hathaway Inc. (NYSE: BRK-A) has released its annual letter for 2016, and 24/7 Wall St. has already broken out many of the top trends and takeaways from that report. Covered here are the most profitable positions in the Berkshire Hathaway portfolio. When Warren Buffett speaks (or invests), people tend to listen. Having attained the status of the world’s wealthiest person on paper makes people care. Buffett is also considered to be the greatest investor of the modern era.

While the full annual report was far more in-depth, it shows that the top 15 common stock holdings of Berkshire Hathaway by size have a cost basis of $65.828 billion. The market value of these investments on the last day of 2016 was $122.032 billion, so just 15 stock trades have given Buffett, his portfolio managers and his shareholders more than $56 billion in profits.

What should stand out here now is that the $56 billion in profits would be an investment gain of 85%. Some of these positions date back many years, while others have been added or raised quite recently.

One thing you will see here on the longer-term holdings, which are not very exciting, is that Buffett’s cost basis is so low that there is almost no reason for Berkshire Hathaway to sell them and have to pay out taxes. Buffett even breaks out how taxes would hit the gains if the sales were locked in.

Another issue to consider in the top holdings and the contributions made by them was that Berkshire Hathaway’s book value per share rose by 10.7% in 2016. Its own common shares rose 23.4%, versus a dividend adjusted gain of 12.0% for the S&P 500. Berkshire Hathaway’s 2016 after-tax earnings from operations were $17.57 billion in 2016, including interest and dividends from investments but excluding capital gains or losses. Berkshire Hathaway’s capital gains were $6.5 billion.

Buffett included a full table in this annual report showing what percentage of each large stake in a company Berkshire Hathaway owned. We also have included wildly profitable positions that are not yet common stocks because of such large gains. 24/7 Wall St. has even made adjustments based on 2017 performance to see which of the largest positions were the most profitable in as close to “real-money terms” as we could get.

One issue that should stand out about the 2017 portfolio is that more changes were made in 2016’s stock holdings than what has ever been seen before. Here are the 10 most profitable positions of Berkshire Hathaway and Warren Buffett for 2017, in alphabetical order.

1. American Express: $10 Billion Profit!

American Express Co. (NYSE: AXP) may have not been as loved by investors as it has been by Buffett. Buffett’s stake is over 151.6 million shares, some 16.8% of the company, and the stake originally dates back to the 1980s. Buffett’s cost basis is a mere $1.287 billion on paper and was worth $11.23 billion at the end of 2016. This gain of about $9.5 billion comes with an even happier sound to Buffett’s ears: at $79.76, American Express shares were last seen up another 7.6%.

2. Apple: $1.6 Billion Profit!

Apple Inc. (NASDAQ: AAPL) has been quite profitable, and this was taken by one of his portfolio managers (and perhaps grown by Buffett and/or Munger). Berkshire Hathaway owned 61.24 million Apple shares at the end of 2016, with a cost basis of more than $7.74 billion, or about $110 per share. While this would have been a $350 million profit at the end of 2016, it was a $26 per share profit as of Friday, for a gain of more than $1.6 billion so far.