Warren Buffett Drops $2.6 Billion on Top Performers: The Cream of Berkshire Hathaway’s New Crop Revealed

Warren Buffett hasn't come across too many attractive investment options in the stock market over the last year. In 2024, he along with his co-portfolio managers at Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) Sold more than $143 billion worth of equities. The parent company offloaded significant parts of its holdings in well-known brands such as Apple and Bank of America .

The vast majority of the proceeds from those stock sales went to pay a historic tax bill along with adding to an increasing stack of funds and Treasury bills. But Buffett made one thing clear in his letter to shareholders in February: "Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned."

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In order to achieve this, Buffett managed to allocate approximately $2.6 billion from Berkshire’s resources into six different publicly listed stocks during the final quarter. Here’s what investors should be aware of and which investment currently seems most promising.

Here are all six stocks Buffett just bought for Berkshire

In the fourth quarter, Berkshire Hathaway announced a rise in stock acquisitions totaling approximately $3.4 billion. However, not all of Berkshire’s equity buys involve publicly listed American firms. As Buffett mentioned, they expanded their holdings in Japan during this period and could have acquired additional non-tradable equities as well.

Here are the six publicly traded U.S. stocks Buffett and his team added to in Berkshire Hathaway's portfolio and how much they spent buying shares.

• Occidental Petroleum , $409.1 million.
• VeriSign , $89.9 million.
• Sirius XM , $296.8 million.
• Pool Corp. , estimated $70 million.
• Domino's Pizza , estimated $470 million.
• Constellation Brands (NYSE: STZ) , estimated $1.3 billion.

The six publicly traded stocks Berkshire added to its portfolio in the fourth quarter all have one notable thing in common. None of them have particularly large market capitalizations. The biggest of the bunch, Occidental, has a market value of $43.7 billion as of this writing. Sirius XM has a market cap of just $7.7 billion.

Berkshire Hathaway notably already holds substantial portions of Occidental, Sirius XM, and VeriSign, which has a $22.1 billion market value. And with the relatively small market caps of the other appealing investments, Buffett has struggled to invest very much cash recently. There's simply not enough room in the market for those stocks for Buffett and his team to make a big acquisition, considering they're managing over $600 billion in total investable assets.

That speaks to Buffett's insistence on value And the hurdles present within Berkshire's substantial investment portfolio persist. As Buffett stated in his 2023 shareholder letter, "Only a few firms in this nation possess the capability to significantly impact Berkshire’s performance. Some businesses we can accurately assess; others elude our valuation efforts. Moreover, even those we can appraise must offer an attractive price point."

The good news for individual investors is they typically don't manage nearly as much money as Buffett. That means a small or mid-cap stock like the six above can become a substantial portion of your portfolio if you want. And one of Berkshire's six buys from last quarter stands out as an attractive option right now.

Here's the best of the bunch

The aforementioned six stocks offer attractive valuations for investors, with each company possessing robust competitive advantages. These firms are quite standard in this regard. Buffett stocks However, the latest inclusion in the collection, Constellation Brands, could be the most undervalued stock among them all.

Constellation Brands holds the top position as the leading producer of Mexican beer. The company’s labels, Corona and Modelo, lead the American market for Mexican lagers. Although they own a segment focused on wines and spirits, their presence isn’t particularly strong in these areas. However, it is primarily within the realm of beer where Constellation excels; this division makes up more than 80% of both their revenue and profit.

The alcohol industry has faced several headwinds recently. The U.S. surgeon general has proposed putting health warning labels on alcohol. Gen Z doesn't drink as much as previous generations at their age. And beer, in particular, faces the challenge of competing with ready-to-drink cocktails.

Despite this, Constellation has successfully maintained steady growth in its beer sales, projecting a 4% to 7% increase in revenues for the fiscal year 2025, which concluded in February. Additionally, the company anticipates an improvement in its operating margin due to its premiumization strategy.

By presenting its beer brands as higher-end choices, the company efficiently utilizes its substantial advertising funds. The corporation’s size significantly contributes to this strategy since it enables them to allocate a larger portion of their resources towards marketing compared to rival Mexican brewing companies. This advantage fosters a positive feedback loop, allowing for increased spending on promoting their branding message, which consequently supports maintaining upscale prices and asserting dominance within the industry.

Before reporting its third-quarter earnings, Buffett acquired shares of Constellation. However, these results proved to be underwhelming due to a 14% decline in wine and spirits sales, effectively negating the progress made by the beer segment. Consequently, management revised their annual forecast downward. Additionally, the stock price has faced more pressure from the newly imposed 25% tariff on products coming from Mexico, potentially impacting both sales volumes and profitability.

Nevertheless, the fundamental business appears robust for sustained growth and presents excellent opportunities for investors. Following the decline in share price, the stock is currently trading at merely 12.4 times anticipated future earnings, based on the latest data. Given Constellation's enduring competitive edge in their beer segment, this positions it as one of the top Buffett-style investments available today.

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Bank of America serves as an advertising sponsor for Motley Fool Money. Adam Levy holds stakes in Apple. The Motley Fool owns shares in and endorses Apple, Bank of America, Berkshire Hathaway, Domino's Pizza, and VeriSign. Additionally, The Motley Fool recommends investing in Constellation Brands and Occidental Petroleum. The Motley Fool also has disclosure policy .