Berkshire Hathaway's Core Holdings: A Masterclass in Long-Term Compounding and Durable Competitive Advantages

Warren Buffett's Berkshire Hathaway has long been celebrated for its disciplined, long-term investment strategy, centered on acquiring businesses with enduring competitive advantages-what Buffett famously terms "economic moats." As of September 30, 2025, Berkshire's portfolio remains heavily concentrated in a handful of high-conviction holdings, including Apple (AAPL), American Express (AXP), Bank of America (BAC), Coca-Cola (KO), Chevron (CVX), and newer additions like UnitedHealth (UNH), Nucor (NUE), and Lennar (LEN). These positions collectively account for 87% of the portfolio's top ten holdings, underscoring Buffett's preference for quality over diversification according to analysis. This article examines how these core holdings exemplify Buffett's philosophy of compounding and durable advantages, supported by historical performance data and Buffett's public assessments.

The Power of Concentration: Core Holdings and Their Moats

Apple, Berkshire's largest holding at 22.69% of the portfolio, remains a cornerstone despite a reduction in its stake from over 40% a few years ago. Buffett has consistently praised Apple's ecosystem, brand loyalty, and recurring revenue streams from services like the App Store and iCloud. As Buffett noted in 2025, "Apple's biz beats Coca-Cola, AmEx; we'll stay in," affirming his belief in its innovation-driven moat. Meanwhile, American Express (18.84% of the portfolio) benefits from a two-sided business model that captures revenue from both cardholders and merchants, giving it an edge over pure payment processors like Visa and Mastercard according to market analysis.

Bank of America (10.96%) and Coca-Cola (9.92%) further illustrate Buffett's focus on businesses with predictable cash flows. Bank of America's "too big to fail" status and robust deposit base provide stability, while Coca-Cola's global brand and 62 consecutive years of dividend increases exemplify its timeless appeal. Chevron (7.09%), though controversial due to environmental concerns, is valued for its energy sector dominance and consistent returns according to financial reports.

Newer Additions and Sector Diversification

Berkshire's 2025 portfolio also reflects strategic forays into healthcare and construction. UnitedHealth (5 million shares acquired) and Nucor (steel producer) highlight Buffett's confidence in sectors poised for long-term growth. UnitedHealth's 2.90% dividend yield and sustainable payout ratio of 36.8% align with Buffett's preference for companies with strong management and reinvestment potential according to investment analysis. Nucor and Lennar, both in the housing sector, benefit from cyclical demand and efficient operational models, further diversifying Berkshire's exposure according to portfolio analysis.

Historical Performance and Buffett's Endorsements

Berkshire's long-term success is rooted in compounding returns from its core holdings. For instance, Coca-Cola's yield on cost has surged to 63% since Berkshire's 1988 purchase, while American Express yields 37% on cost according to financial data.

Buffett's annual letters emphasize patience: "Time is the friend of a wonderful business, the enemy of the mediocre," a mantra reflected in Berkshire's decades-long ownership of these stocks according to shareholder letters.

Buffett's Philosophy in Action

Buffett's public assessments reinforce his commitment to these principles. In his 2025 Annual Meeting speech, he reiterated, "If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes," underscoring his long-term orientation. His early investment in American Express, made during a crisis in the 1960s, became a defining success, illustrating his ability to identify undervalued businesses with durable moats according to financial analysis.

Conclusion: A Blueprint for Sustainable Growth

Berkshire's portfolio strategy-concentrated in high-quality, dividend-paying stocks with enduring advantages-continues to deliver compounding returns. By prioritizing businesses like Apple, American Express, and Coca-Cola, Buffett has built a portfolio that thrives on patience, reinvestment, and a deep understanding of economic moats. As the 2025 portfolio evolves with newer additions like UnitedHealth, it reaffirms Buffett's timeless principles: "Our favorite holding period is forever" according to investment commentary. For investors, Berkshire's approach offers a masterclass in balancing long-term vision with disciplined execution.