Diversification ranks among the most important components of many investment strategies. However, one of the world's greatest investors isn't gung ho about the idea. Warren Buffett once said, "Diversification is protection against ignorance. It makes little sense if you know what you are doing."
With Berkshire Hathaway delivering an average annual return of around 19.8% over almost six decades, Buffett clearly knows what he's doing. Unsurprisingly, he hasn't diversified Berkshire's holdings as much as most investors would. Nearly 66% of Buffett's portfolio is invested in these five stocks as 2025 begins.
1. Apple
Apple (AAPL -0.20%) has ranked as the largest holding in Buffett's Berkshire Hathaway portfolio for several years. The iPhone maker is still at the top early in the new year. Berkshire owns 300 million shares of Apple worth around $73.2 billion, representing 24.8% of its total holdings.
However, Apple doesn't dominate Berkshire's portfolio like it once did. Buffett began reducing his stake in the company in the fourth quarter of 2023 and accelerated the selling in 2024. His decision came at a cost, though, with Apple stock soaring while he slashed Berkshire's position in the consumer tech giant.
2. American Express
Buffett's second-largest holding is American Express (AXP 1.80%). Berkshire owns over 151.6 million shares of the financial services stock worth roughly $45.2 billion -- 15.3% of the conglomerate's total portfolio.
In his annual letters to Berkshire Hathaway shareholders in 2023 and 2024, Buffett listed American Express among a handful of stocks he expected to own "indefinitely." Berkshire has owned AmEx for several decades. Buffett even noted in his shareholder letter last year that the company's share of American Express' earnings in 2023 was significantly greater than its initial investment of $1.3 billion. That's a great example of the benefit of buying and holding the stocks of exceptional businesses.
3. Bank of America
Bank of America (BAC 1.17%) ranks as Berkshire's third-largest position. Buffett's company owns around 766.3 million shares of BofA worth $33.9 billion, comprising 11.5% of Berkshire's portfolio.
It wasn't long ago when Bank of America lagged behind only Apple as Berkshire's No. 2 holding. However, Buffett began regularly selling shares of the big bank in July 2024.
4. The Coca-Cola Company
Berkshire owns 400 million shares of The Coca-Cola Company (KO -0.15%) worth in the ballpark of $24.7 billion. This stake makes up 8.4% of the conglomerate's portfolio, enough to land Coca-Cola in fourth place among Buffett's top holdings.
Like American Express, Coca-Cola was one of the stocks Buffett highlighted in his latest two letters to Berkshire Hathaway shareholders. It's also Buffett's longest-held position. As he wrote to Berkshire shareholders last year, "When you find a truly wonderful business, stick with it."
5. Chevron
Chevron (CVX 0.78%) comes in at No. 5 on the list of Buffett's largest positions. Berkshire owns over 118.6 million shares of the huge oil and gas company worth around $17.4 million with its stake in Chevron accounting for 5.9% of the total portfolio.
Buffett first initiated a position in Chevron in late 2020. Since then he has flipped between selling and buying shares of the energy giant. The legendary investor most recently sold shares of Chevron in the second quarter of 2024.
Best pick of the bunch?
Which of these top Buffett stocks is the best pick? I think all of them should deliver positive long-term returns, especially with dividends included. However, two of them especially stand out, in my opinion.
No one knows for sure how any stock will perform over the next 12 months. My hunch, though, is that Bank of America could be the biggest star in this group. The stock is valued attractively with a forward price-to-earnings multiple below 12. The chances of deregulation being implemented by the Trump administration that helps the financial services sector appear to be pretty good.
If we look out over the next decade and beyond, I think Apple could generate the greatest gains. I fully expect artificial intelligence (AI) and augmented reality (AR) to provide significant tailwinds for the company in the future. Buffett's biggest holding seems likely to be one of his biggest long-term winners.
