Some people say, Warren Buffett, the 86-year-old “Oracle of Omaha” is past his prime. Others are not so sure. If this past year is any sign, naysayers may want to hit the pause button and check the numbers.
Buffett’s financial decisions allowed him to add about $12 billion to his wealth in 2016. Bloomberg says Buffett’s wealth increased 19% this year to $74.1 billion. Forbes puts the number and percentage a little higher - $74.2 billion and 20%. Either way, that’s a bunch.
Berkshire’s Bets In 2016
The investments made by Buffett and his Berkshire Hathaway Inc. (NYSE:BRK-BC) holding company were responsible for his wealth jump, much of it occurring since the election of Donald Trump as President in November. Buffett supported Hillary Clinton.
Contrary to his own long-standing negative views, Buffett invested in airlines and banks in 2016 and those bets appear to have paid off. Additional investments in both media and food stocks have produced mixed results.
Up, Up And Away
In November Buffett disclosed that his investment vehicle, BRK-B had acquired in interest in no less than 4 U.S. airlines before Sept. 30. This despite the fact Buffett had stayed away from the industry after an investment in USAir Group in 1989 went south.
In the filing Buffet disclosed stakes in United Continental Holdings Inc. (NYSE:UALB), which has gained 46% over the past 3 months; Delta Air Lines Inc. (NYSE:DALC), up 27% and American Airlines Group Inc. (TSX:AALB), up 34% over the same period. Later, on CNBC, Buffett said he had also bought shares of Southwest Airlines Co. (NYSE:LUVC), after Sept. 30. That stock has risen 32%.
Banking On A Stage Coach
Although Wells Fargo & Co. (NYSE:WFCC) suffered horrendous publicity following revelation the company imposed sales-quotas on employees that led to the opening of millions of unauthorized customer accounts, Buffett maintained his position, taken earlier.
The bank fired 5,300 employees, faces fines and investigations and CEO John Stumpf was forced out. Wells Fargo Stock gained about 23% in the aftermath of all that turmoil.
Another banking sector stock in Buffett’s portfolio, Goldman Sachs & Co. (NYSE:GSC), has been a beneficiary of a Trump bump to the tune of a 49% gain over the past 3 months. Rounding out the banking sector, M&T Bank Corp. (NYSE:MTBC), is up 36%; U.S. Bancorp (NYSE:USBD), gained 22% and American Express Co. (NYSE:AXPC), is plus 16% over the same period.
Entertainment And Refreshments
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And Finally, A McMuffin
A new HBO documentary, titled Becoming Warren Buffett, set to air Jan. 30, reveals that Buffett chooses his McDonald’s breakfast order based on the stock market. In one scene, the Berkshire Hathaway CEO picks up a $2.95 sausage McMuffin with egg and cheese instead of a more favored bacon, egg and cheese biscuit at $3.17 because, “The market’s down this morning.”
That vignette is more about discipline and the art of being frugal than it is about insight into investing “by fast food order.” Others may try to understand and emulate the billionaire philanthropist, but only Buffett can ever be Buffett.