While mostly tallying overall gains, the majority of Berkshire Hathaway Chairman and CEO Warren Buffett (Trades, Portfolio)’s largest portfolio holdings, which represent more than half of assets, have underperformed the year-to-date return of the S&P 500.
Versus a 1% increase in the index, Wells Fargo & Co. has declined 10.7%, Bank of America Corp. 5.9%, The Kraft Heinz Co. 17.1% and Coca-Cola Co. 3.9%. Apple, the stock that outperformed and his largest position, has gained 9.79%.
Despite Buffett’s preference for long-term investing, short-term swings in his portfolio will influence his bottom line reporting in the second quarter. Changes in Generally Accepted Accounting Principles (GAAP), which went into effect this year, require Berkshire Hathaway (BRK.A)(BRK.B) to take into account unrealized gains and losses when it calculates earnings.
The first quarter illustrated the severe effect the revised rules can have. Berkshire reported $6.26 billion in unrealized investing losses, contributing to a net loss of $1.14 billion, compared to $205 million in unrealized investment gains and $4.1 billion in net earnings in the first quarter of 2017.
Buffett is considered one of the best investors in the world, swelling Berkshire’s stock price by 20.8% per year from 1965 to 2016.
For investors, this year’s downtick means several of the billionaire’s may trade at more compelling prices. Here are his top three positions: