Through his holding company Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B), Warren Buffett controls a massive portfolio of stocks that is today worth more than $370 billion. The portfolio contains many large and successful positions, some of which Buffett has held for decades. However, the portfolio is not perfectly constructed and contains a fair number of stinkers. Some stocks have been long-term failures while others have recently taken a turn for the worse.
Making matters more interesting is that Buffett’s portfolio is fairly narrow given its size and is highly concentrated in a few large bets. This can make the portfolio susceptible to a downturn in a big position. Yet, in his wisdom, Buffett always cautions investors against paying too much attention to short-term fluctuations in the stock market. Rather, says Buffett, investors should focus on gains achieved in a stock over the long term. Here are the stock stinkers in Warren Buffett’s portfolio.
Apple (AAPL)
Let’s start with Warren Buffett’s largest holding, Apple (NASDAQ:AAPL). To say the position Berkshire Hathaway holds in AAPL stock is outsized would be an understatement. Currently, Berkshire owns 905.56 million shares of Apple stock worth $153.83 billion. A total of 41.5% of the holding company’s portfolio is comprised of AAPL stock. Berkshire Hathaway is Apple’s largest shareholder outside of mutual fund companies such as Vanguard.
This is to say that it’s very bad for Warren Buffett and Berkshire Hathaway that AAPL stock is down 8% on the year and badly trailing the market after more than a decade of outperformance. Today, Apple is one of the worst-performing stocks in the benchmark S&P 500 index. The decline is being blamed on slowing sales of iPhones and other electronic devices, notably in China. An antitrust lawsuit filed by the U.S. Justice Department isn’t helping either.
While there’s hope that AAPL stock will bounce back, some analysts are pointing to Berkshire Hathaway’s big holding of Apple shares as an example of the risks that come when investors are overly concentrated in one stock.
Charter Communications (CHTR)
Even worse than Apple has been the year-to-date performance of Charter Communications (NASDAQ:CHTR). Since the first trading session in January, CHTR stock has plunged 28%. What makes this holding of Warren Buffett’s particularly bad is that it has been a long-term stinker, down 20% over the past five years. Buffett’s stake is relatively small at 3.82 million shares worth $1.09 billion, comprising just 0.3% of the Berkshire Hathaway portfolio. But by most metrics, this has been a losing investment.
Buffett surely likes Charter Communications’ position as the biggest cable operator and largest pay TV provider in America. However, CHTR stock has been hurt by the company’s legacy Spectrum internet business unit, which continues to lose market share and money. In its most recent quarter, Charter reported losing 61,000 residential and small business internet customers. Consequently, the company’s profit amounted to $7.07 per share, which was nearly 20% below Wall Street forecasts.
Paramount Global (PARA)
One of the absolute worst holdings of Warren Buffett is entertainment giant Paramount Global (NASDAQ:PARA). The stock has performed so badly that it begs the question: why is Buffett still holding onto this stinker? So far in 2024, PARA stock has fallen 19%, bringing its 12-month decline to 47%. Over five years, the company’s share price is down 77%. The company is struggling under high debt levels, an unprofitable streaming service, and a strike by Hollywood actors and writers last year that hurt its production.
Paramount Global has let it be known that it’s for sale and is willing to entertain offers. While a few rumors of a potential sale have surfaced, to date no deals have been formally announced, leaving PARA stock in limbo. It might be that Buffett is hanging on in hopes that a sale will be announced and the share price will rise. However, it’s hard to know what Buffett is thinking as he almost never discusses individual stocks in public. He did complain about Paramount Global cutting its dividend at Berkshire Hathaway’s annual meeting.
Currently, Berkshire Hathaway owns 63.32 million shares of PARA stock valued at $750.81 million, comprising 0.2% of the portfolio.
On the date of publication, Joel Baglole held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.