Warren Buffett's Berkshire Hathaway Holds 3 Stocks That Underperformed Market in the Past 5 Years

Warren Buffett's Berkshire Hathaway has underperformed the market in the past five years with three top holdings: Coca-Cola, Kraft Heinz, and SiriusXM Holdings. Coca-Cola has gained 34%, while Kraft Heinz has lost 14%. SiriusXM Holdings has declined 27%. The underperformance is attributed to challenges in growing their businesses, particularly with Kraft Heinz facing declining revenue and flat sales. Despite being a Dividend King, Coca-Cola's high P/E multiple may prove to be a barrier to future growth.

Berkshire Hathaway, the investment conglomerate led by Warren Buffett, has seen its top holdings underperform the market in the past five years. Among the underperforming stocks are Coca-Cola (KO), Kraft Heinz (KHC), and SiriusXM Holdings (SIRI). While these companies are well-known brands, their future growth prospects remain questionable.

Coca-Cola, a beverage company, has gained 34% over the past five years, but this performance is significantly underwhelming compared to the S&P 500, which has roughly doubled over the same period. Coca-Cola's high yield of 3.1% makes it an attractive option for income investors, but its growth prospects are limited. The company's business is stable, but the iconic brand may face challenges in growing its sales due to factors such as weight loss drugs and the general movement towards healthier eating habits Warren Buffett Is One of the World's Most Successful Investors but These 3 Berkshire Stocks Have Vastly Underperformed the Market in the Past 5 Years^[1].

Kraft Heinz, a consumer goods company, has seen its revenue remain relatively flat for multiple years. Its products are known for not being the healthiest options for consumers, and the company has recently announced plans to break up its business into two separate entities. Kraft Heinz's revenue totaled $25.8 billion last year, down from $26.1 billion in 2021. The company's dividend yields more than 6%, but there is considerable risk that it may not be safe, especially given the uncertainty surrounding the restructuring of its operations Warren Buffett Is One of the World's Most Successful Investors but These 3 Berkshire Stocks Have Vastly Underperformed the Market in the Past 5 Years^[1].

SiriusXM Holdings, a satellite radio company, has seen its revenue decline over the past five years. The company currently has 33 million subscribers, down from more than 34 million five years ago. While a SiriusXM subscription makes it easy for people to stream music and news to their cars, it is easier than ever to do the same using a regular cellphone and Bluetooth. This has made it an uphill battle for SiriusXM to grow its subscribers, leading to a 57% decline in its stock price over the past five years Warren Buffett Is One of the World's Most Successful Investors but These 3 Berkshire Stocks Have Vastly Underperformed the Market in the Past 5 Years^[1].

Berkshire Hathaway's underperformance with these top holdings highlights the challenges faced by the investment conglomerate in finding attractive acquisition opportunities. The company's recent acquisition of Occidental Petroleum's chemical division, OxyChem, for $9.7 billion, is a significant deal that will help Occidental reduce its considerable debt. However, it is unlikely to make a significant difference in Berkshire's bottom line, as it uses less than 3% of the conglomerate's cash Berkshire Hathaway to pay $9.7 billion for OxyChem, potentially Warren Buffett's last big deal^[2].

As Berkshire Hathaway prepares for a leadership transition to Vice Chair Greg Abel, investors are watching to see what kind of deals he might land on his own. Abel is a much more hands-on manager than Buffett, and he might do more to get Berkshire companies working together and potentially consolidating some things. However, this might be a break with tradition, as Buffett always promised business owners that he just wanted to buy good businesses and then largely leave them alone Berkshire Hathaway to pay $9.7 billion for OxyChem, potentially Warren Buffett's last big deal^[2].