Examining which ASX shares the legendary Warren Buffett might invest in today is not an easy task. After all, Buffett is one of the greatest investors of all time, so trying to get into his head is a very humbling experience, to say the least. But since we at the Fool try to educate others about how to invest, it's a worthwhile pursuit.
We are very fortunate to be able to get a comprehensive look at Warren Buffett's investments every three months. That's because his investment house, Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) is a publically traded company that has to disclose its investments every quarter.
So to kick things off, let's take a look at the current top ten investments of Berkshire Hathaway, according to CNBC's Buffett portfolio tracker:
- Apple Inc (NASDAQ: AAPL), at 47% of Berkshire's portfolio
- Bank of America Corp (NYSE: BAC) at 8.3%
- Coca-Cola Co (NYSE: KO) at 7.5%
- American Express Company (NYSE: AXP) at 6.7%
- Chevron Corporation (NYSE: CVX) at 6.2%
- Kraft Heinz Co (NASDAQ: KHC) at 3.9%
- Occidental Petroleum Corporation (NYSE: OXY) at 3.6%
- Moody's Corp (NYSE: MCO) at 2.3%
- Activision Blizzard Inc (NASDAQ: AVTI) at 1.2%
- HP Inc (NYSE: HPQ) at 1.1%
So a rather interesting and somewhat eclectic collection of investments there.
How to invest, Berkshire Hathaway style
What immediately stands out is Berkshire's massive stake in Apple. At 47% of Berkshire's entire portfolio, it's clear that Buffett has chosen this company as its ride-or-die stock. And it's not hard to see why. Apple indisputably possesses one of the best brands on the planet. The company and its management are of the highest calibre and have shown a consistent ability to generate monstrous profits for decades now.
The other investments are worth analysing on their own merits though. Bank of America, American Express, and Moody's are all financial stocks. Chevron and Occidental are both oil shares. Coca-Cola needs no explanation and nor does food behemoth, Kraft Heinz. Activision Blizzard is a gaming giant behind names like Call of Duty and World of Warcraft. And HP Inc is the office supplies company most of us would be familiar with.
So how would Buffett invest $5,000 in ASX shares today if he could? It's difficult to compare the ASX and US markets, seeing as we simply don't house the same kinds of world-dominating companies that America does.
But let's give it a go anyway.
If I were to deploy $5,000 into ASX shares to try to replicate a Buffett portfolio, here's what I would do.
Building a $5,000 ASX share portfolio like Buffett
I would start with $1,000 in Commonwealth Bank of Australia (ASX: CBA) shares. CBA is Australia's largest bank and shares many of the same characteristics as Bank of America. CBA also provides popular credit products, a la American Express, and provides other financial services for ASX bankers and investors, although not quite in the same manner as Moody's.
But I, and many other analysts, regard CBA as the ASX's best-run bank, and I think that it would be Buffett's pick on the ASX.
Another $1,000 would go into Woodside Energy Group Ltd (ASX: WDS) shares. Woodside is the ASX's largest oil and gas producer, and shares similarities with Occidental and Chevron in this regard. Buffett is clearly bullish on energy right now, and I think Woodside would be a strong contender for energy exposure on the ASX.
Bega Cheese Ltd (ASX: BGA) could be a nice local substitute for Kraft Heinz. Bega's dairy products and nut spreads are popular here in Australia, and provide similar exposure to the kinds of defensive consumer sales products as Kraft Heinz. So there's another $1,000 gone.
With the final $2000, I would invest in the iShares S&P 500 ETF (ASX: IVV). For one, Buffett has often touted the benefits of investing in a low-cost S&P 500 index fund, which the IVV ETF most certainly is.
However, the primary reason I have chosen this ETF is that it gives us ASX investors an easy way to invest in many of those top Buffett holdings ourselves. Buffett's top investment, Apple, is also the largest holding in the iShares S&P 500 ETF with a 7.4% weighting. Berkshire Hathaway itself is number six, while Chevron, Coca-Cola, and Bank of America are also weighted towards the top of the pile.
That's how I think Warren Buffett would build a $5,000 ASX share portfolio here on the ASX today. I don't claim to speak for the great man, of course. But I think this is the closest way that ASX shares can reflect the intentions of what Buffett has done with his own holdings.