Warren Buffett's "Forever" Holdings: A Deep Dive into His Top Three Stocks

Warren Buffett, the renowned investor and CEO of Berkshire Hathaway, has built a reputation for his disciplined and value-driven investment strategy. With a portfolio worth over $303 billion, it's no surprise that his investment decisions are closely scrutinized by the financial community. One of the most intriguing aspects of Buffett's portfolio is the significant allocation to just three stocks, which account for approximately 28.4% of his total holdings. These stocks, American Express (AXP), Coca-Cola (KO), and Bank of America (BAC), are often referred to as his "forever" holdings, as he plans to maintain these investments for the long term. Let's delve into the reasons behind Buffett's confidence in these stocks and explore how they align with his core investment principles.



American Express (AXP)

Buffett first bought a stake in American Express in the 1960s and has held onto it ever since. The company's unique business model, operating as both the issuing bank and the network operator, allows it to control more of the economics of transactions, leading to substantial discount revenue. In 2024, American Express generated $35.2 billion in discount revenue, accounting for the majority of its total sales. The company has been pushing its premium cards to more consumers and raising annual fees, contributing to a 16% year-over-year growth in card fees revenue in 2024. Despite the stock's recent strong performance, it is still relatively affordable, trading at a forward PE of 21.



Buffett's investment in American Express exemplifies his value investing philosophy, as he bought the stock when it was undervalued, and his long-term focus, as he has held onto the position for over five decades. The company's strong brand and unique business model also align with Buffett's preference for quality over quantity.

Coca-Cola (KO)

Buffett first bought shares in Coca-Cola in the late '80s and has continued to add to his position. The company's strong brand has enabled it to raise prices in response to inflation, with a 10% year-over-year increase in the most recent quarter. Coca-Cola's scale provides it with significant advantages, including better control over its supply chain and leverage in distribution agreements. The company's broad product portfolio and global reach contribute to its resilience and growth prospects.

Buffett's investment in Coca-Cola is another example of his value investing philosophy, as he bought the stock when it was undervalued, and his long-term focus, as he has held onto the position for over three decades. The company's iconic brand and global distribution network also align with Buffett's preference for quality over quantity.

Bank of America (BAC)

Buffett's investment in Bank of America highlights his confidence in the U.S. banking system. As a major financial institution with a strong capital base and consistent dividend payouts, Bank of America exemplifies the stability Buffett seeks. The company's diversified business model, which includes consumer banking, wealth management, and investment banking, contributes to its long-term growth prospects.

Buffett's investment in Bank of America is an example of his value investing philosophy, as he bought the stock when it was undervalued following the financial crisis, and his long-term focus, as he has held onto the position for over a decade. The company's strong capital base and diversified business model also align with Buffett's preference for quality over quantity.

In conclusion, Warren Buffett's "forever" holdings in American Express, Coca-Cola, and Bank of America exemplify his core investment principles, including value investing, long-term focus, and quality over quantity. These stocks have demonstrated strong long-term performance and growth prospects, making them attractive investments for Buffett and his shareholders. By focusing on these principles, Buffett has built a portfolio that has consistently generated substantial returns for Berkshire Hathaway.