Warren Buffett’s 5 Worst Investments of All Time - Insider Monkey

Warren Buffett’s 5 Worst Investments of All Time

In this article we discuss Warren Buffett’s 5 worst investments of all time. If you want to read our detailed analysis of these investments, go directly to Warren Buffett’s Worst Investments of All Time.

5. Anheuser-Busch InBev SA/NV (NYSE: BUD)

Number of Hedge Fund Holders: 18

Anheuser-Busch InBev SA/NV (NYSE: BUD) is a Belgium-based company that makes and sells different kinds of drinks. It is ranked fifth on our list of Warren Buffett’s worst investments of all time. The stock has returned more than 52% to investors in the past year.  Buffett was the second-largest shareholder in the company when he sold his stock, representing close to 5% of the Berkshire portfolio at the time and worth over $2 billion. Buffett made $1.36 billion on the sale of the stock in the early summer of 2008.

In August 2008, Buffett appeared on CNBC and said that he had made a mistake selling the Anheuser-Busch InBev SA/NV (NYSE: BUD) shares he owned in anticipation that a takeover bid related to the firm would fail. 

Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Anheuser-Busch InBev SA/NV (NYSE: BUD) with 8.1 million shares worth more than $503 million. 

In its Q1 2020 investor letter, Broyhill Asset Management, an asset management firm, highlighted a few stocks and Anheuser-Busch InBev SA/NV (NYSE: BUD) was one of them. Here is what the fund said:

“We also diversified our beer exposure during the quarter, adding a direct investment in Ambev (ABEV) to compliment our existing investment in Anheuser Busch Inbev (BUD). As the current environment has punished highly leveraged businesses like BUD (despite the company’s ability to generate strong and recurring cash flow), the opportunity to own ABEV, with net cash on its balance sheet and the highest returns on capital in the industry—at a lower multiple than its parent—was too good to pass up.

Together, these names represent roughly 20% of our capital today. Given their cheap valuations, combined with the fact that beer and tobacco consumption has historically increased during recession, one could argue that we should have even more exposure to these Sin Stocks. In principle, we agree, and given the opportunity, we’d be happy to increase our positions. But in the interim, we are highly sensitive to maintaining balance in the portfolio. At one end, we own high quality, defensive businesses that should fare well in almost any environment. At the other end, we’ve begun building a portfolio of more cyclical businesses, positioned to rebound sharply and gain share once the clouds clear. We discuss a few of these investments below.”

4. Graham Holdings Company (NYSE: GHC)

Number of Hedge Fund Holders: 23    

Graham Holdings Company (NYSE: GHC) is a Virginia-based holding company founded in 1947. It is placed fourth on our list of Warren Buffett’s worst investments of all time. The company’s shares have returned more than 88% to investors over the past year. Buffett first bought a stake in the firm early on in his career during the early 1970s. He kept the company on his portfolio for almost 44 years before shedding his stake significantly in 2018. The 44-year position did not offer Berkshire significant gains, unlike some other long-held stocks on their profile.

Graham Holdings Company (NYSE: GHC) was the biggest newspaper-related investment of Berkshire and the Buffett exit represented a shift underway in the wider business world towards digital offerings as small and local news outlets struggled to stay afloat. 

At the end of the first quarter of 2021, 23 hedge funds in the database of Insider Monkey held stakes worth $550 million in Graham Holdings Company (NYSE: GHC) , down from 25 in the previous quarter worth $502 million.

3. Sanofi (NASDAQ: SNY)

Number of hedge fund holders: 15 

Sanofi (NASDAQ: SNY) is a France-based pharmaceutical company founded in 2004. It is ranked third on our list of Warren Buffett’s worst investments of all time. The stock has returned more than 10% to investors year-to-date. Buffett first showed interest in the stock in 2006 when he bought over 480,000 shares at around $45 per share. He subsequently increased his stake in the firm in the coming months and years, before finally reversing course. In the first quarter of 2018, he trimmed his take in the pharma giant 4.6% from the preceding quarter. 

Sanofi (NASDAQ: SNY) has not performed as well as Buffett would have liked in the time that held onto the shares. In 2019, the five-year return for the pharma giant was -20%, a number that could have prompted Buffett to sell his position in the company. 

Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Sanofi (NASDAQ: SNY) with 18 million shares worth more than $896 million. 

In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Sanofi (NASDAQ: SNY) was one of them. Here is what the fund said:

“Top detractors in Q4 included Sanofi. This defensive security was out of favor as vaccine distribution started in earnest and the market shifted focus to a post-COVID world. Sanofi performed about in line with other global pharmaceuticals companies. We believe Sanofi’s management team will have success improving the pipeline and managing costs through restructuring. For perspective, Swedish Match was down ~4% in the quarter but provided a 54% total return for 2020.”

2. The PNC Financial Services Group, Inc. (NYSE: PNC)

Number of Hedge Fund Holders: 39     

The PNC Financial Services Group, Inc. (NYSE: PNC) is a Pennsylvania-based bank holding company founded in 1845. It is placed second on our list of Warren Buffett’s worst investments of all time. The stock has returned more than 75% to investors in the past year. Buffett started investing in the firm in late 2018, slowly increasing his stake in the company through 2019 and 2020 to close to 10 million shares before shelling 41% of these in a bank-related purge from his portfolio in the second quarter of 2020.

At the end of the fourth quarter of 2020, Buffett had sold his remaining shares in The PNC Financial Services Group, Inc. (NYSE: PNC). This activity around the bank was unusual for an investor like Buffett, whose top holdings have been in his portfolio for decades. 

At the end of the first quarter of 2021, 39 hedge funds in the database of Insider Monkey held stakes worth $418 million in The PNC Financial Services Group, Inc. (NYSE: PNC), up from 35 in the previous quarter worth $188 million.

1. Berkshire Hathaway Inc. (NYSE: BRK-A) (Textile Business)

Number of Hedge Fund Holders: 111  

Berkshire Hathaway Inc. (NYSE: BRK-A) is a Nebraska-based holding company founded in 1839/ It is ranked first on our list of Warren Buffett’s worst investments of all time. The company’s shares have returned more than 57% to investors over the course of the past twelve months. Buffett first bought a stake in Berkshire Hathaway Inc. (NYSE: BRK-A) in 1962 when the firm was a textile company. In 1965, he took control of the whole firm. At the time, the company was valued at around $22 million. 

Buffett continued to try and work the core textile business of Berkshire Hathaway Inc. (NYSE: BRK-A) in the next two decades before finally giving up in 1985 and shutting it down. In 2010, in an interview with CNBC, Buffett admitted that he had bought control of the firm out of spite and the move had turned out to cost around $200 billion. 

At the end of the first quarter of 2021, 111 hedge funds in the database of Insider Monkey held stakes worth $19 billion in Berkshire Hathaway Inc. (NYSE: BRK-A), up from 110 in the preceding quarter worth $20 billion.

In its Q1 2021 investor letter, Vltava Fund, an asset management firm, highlighted a few stocks and Berkshire Hathaway Inc. (NYSE: BRK-A) was one of them. Here is what the fund said:

“Despite the considerable rise in stock markets over the past year, there are still many attractive opportunities. Human nature also is playing a bit into our hands. Investor crowds often chase popular stocks, hot IPOs, or mysterious SPACs and completely leave aside stocks they consider boring and not sexy enough. A typical example of this category is our long-term largest position in Berkshire Hathaway. Since we bought it for the first time, its price has nearly quadrupled and yet it remains just as undervalued today as it was at that time. Considering the current rate at which it is buying back its own shares and the amount of cash that Berkshire Hathaway has, my greatest wish as a shareholder is for the company’s share price to remain as low as possible for as long as possible.”

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