Buffet_Feb19

Three of Warren Buffets biggest bets

Clay Carter

Macrovue’s Head of Investment Committee Clay Carter runs his ruler over three of Warren Buffets most successful investments over the past 12 months.

Apple (NASDAQ: AAPL)

Apple reported 4Q earnings on 30 January 2019 which were well received by the market.

Apple Q1 EPS of $4.18 beat consensus estimates by $0.01. Revenue of $84.3B (-4.5% Y/Y) exceeded estimates by $330M. The reductions in iPhone sales and Apple’s China business were largely priced into the quarter following Apple's outlook cut on 3 January 2019.

Revenue breakdown:

  • iPhone, $52B (-15% Y/Y)
  • Mac, $7.4B (+9% Y/Y)
  • Wearables, Home and Accessories, $7.3B (+33% Y/Y)
  • iPad, $6.7B (+17% Y/Y)
  • Services, $10.9B (+19% Y/Y).

The Apple Services margin was a healthy 62.8%. Greater China revenue fell from nearly $18B in last year's quarter to $13.2B. CEO Tim Cook attributed the quarter's iPhone weakness to the soft China market.

Operating cash flow was $26.7B and Apple returned $13B to investors during the quarter. The net cash balance was $130B at period's end. Q2 guidance has revenue from $55B to $59B (consensus: $58.97B), gross margin from 37% to 38% (consensus: 38%), and operating expenses of $8.5B to $8.6B.

Apple returned +12.2% in the year to 31 January 2018.


American Express (NYSE: AXP)

American Express Q4 GAAP EPS of $2.32 beat estimates by $0.52. Revenue of $10.47B (+7.9% Y/Y) missed by $110M. While revenue from its consumer services and commercial services groups rose, it stagnated at its merchant and network services unit.

American Express sees 2019 revenue growth of 8%-10%, implying revenue of $43.7B-$44.4B; consensus estimate $43.5B. The company is guiding to EPS of $7.85-$8.35 versus a consensus estimate of $8.14.

  • Q4 global consumer services group net income of $702M rose 13% Y/Y and revenue net of interest expense rose 11% to $5.6B, reflecting higher loans, card member spending, and card fees.
  • Q4 global commercial services net income increased 15% to $624M Y/Y, and revenue net of interest expense rose 8% to $3.3B, reflecting higher card member spending.
  • Q4 global merchant and network services net income increased 9% to $501M, and revenue net of interest expense was $1.6B, unchanged from a year ago; higher card member spending was offset by a decrease in the average discount rate and lower revenue from network partners.

American Express returned +17.26% in the year to 31 January 2018.


Coca Cola (NYSE: KO)

Coca-Cola now has a significant 45.8% volume-based share of the $313 billion carbonated soft-drink market in 2018, according to recent Euromonitor data. The portion has edged higher in recent years, up from 44.7% in 2009, driven by the company's well-recognised brands.  PepsiCo is number two with a 19% share, slightly below the 19.2% in 2009.

Coca-Cola's carbonated soft-drink share leads in western Europe (46.5%), as well as in eastern Europe (33.4%), North America (36.2%) and the Asia-Pacific region (56.4%). In fact Coca-Cola owns five of the world's top 10 carbonated soft-drink brands, based on Euromonitor data (2018). These brands accounted for 40.5% of the market in 2018 vs. 40.4% in 2017. PepsiCo owned or distributed the other five top brands, which accounted for 16.3% of the market.

The Coca-Cola brand was the most popular choice, with a 23.8% share, followed by Pepsi's 9.2%. Coca-Cola is still spending heavily on marketing. It spent $3.2 billion on advertising in 2018 through Sept. 30, up 10% from the prior-year period

Coca Cola returned +16.23% in the year to 31 January 2018.


You can invest in these companies directly through Macrovue’s Warren Buffet Top 10 Vue.


Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual and does not constitute financial advice. Consider the appropriateness of the information in regards to your circumstances.

Past performance is not a reliable indicator of future performance. 

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