Warren Buffett's Best-Performing

Legendary investor Warren Buffett, chairman and CEO of Berkshire, has led the holding company to outperform the S&P 500 by an average of 11.1% from 1965 through 2015. Just one hundred dollars invested in Berkshire in 1965 would be worth $1.1 million today.

Investors can get in on the Oracle of Omaha’s stock-picking prowess by buying shares in Berkshire Hathaway or by buying shares of the public companies in its portfolio. At the end of the second quarter, Berkshire held shares of 44 such companies, with only 20 accounting for more than 0.5% of its total stock portfolio.

Buffet is beating the broader market so far in 2016, with Berkshire’s Class A shares (the super-pricey ones) and B shares (the ones most investors would buy) up 9.4% and 9.2%, respectively, compared with the S&P 500’s 6.2% total return. The following eight of Berkshire’s largest 20 public holdings have outperformed the broader market so far in 2016.

First up is Wal-Mart Stores. While the discount retailer’s financial performance and stock-price performance have perked up in 2016, there’s no reason to believe, in my opinion, that the stock will beat the market again over any significant period. Quite simply, Amazon.com has been eating Wal-Mart’s lunch, as folks increasingly embrace not only online shopping, but online shopping at Amazon in particular. Warren Buffett’s best-performing stocks to avoid

For the first six months of calendar year 2016 (Wal-Mart’s fiscal 2017), the retailer’s revenue edged up 0.7% as reported and 3.4% in constant currency from the year-ago period. Meanwhile, its operating income for this period declined 2.6% as reported and 0.1% in constant currency, and adjusted earnings per share declined nearly 3%. For the full year, analysts expect revenue to increase 1%, but adjusted EPS to fall 5.4%.

Most buy-and-hold investors should also pass on agricultural equipment titan Deere & Company. Its returns listed in the chart conceal the fact that it’s an extremely volatile cyclical stock, meaning its fortunes are largely tied to the macroeconomic environment. That’s not necessarily a bad thing, but making money in such stocks even over the long haul depends a lot upon the timing of your buys. In fact, Deere’s price is still lower than it was at its all-time high about eight years ago. Moreover, the company continues to struggle — year-over-year revenue and earnings per share dropped 8% and nearly 25%, respectively, in the first half of 2016 — because agricultural industry fundamentals remain weak.