Warren Buffett reached a $153 billion net worth with strategic investments, and that’s the main reason why many people monitor what the Oracle of Omaha is doing in the stock market.
Buffett recently drew attention by purchasing a $4.3 billion stake in Alphabet stock. That was enough news to send shares of Google’s parent company more than 10% higher in less than two weeks.
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The move shocked investors since Buffett isn’t known for aggressively buying tech stocks. However, you may be shocked to see some of the top-performing stocks that aren’t in Buffett’s portfolio. It goes to show that investors can outperform Buffett if they pick the right stocks, but it’s certainly not an easy task.
Nvidia is the largest publicly traded corporation and has a vast competitive moat over its competition. However, Buffett has been adamant about not investing in things that he doesn’t fully understand, and that has caused him to miss out on many big tech stocks. Buffett’s portfolio is also missing other AI chip leaders like Broadcom and AMD.
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Meta Platforms is another shocking exclusion from Buffett’s portfolio, especially since he has warmed up to Alphabet and Amazon. Facebook and Instagram continue to capture people’s attention and produce billions of dollars in quarterly profits from robust ad spending. Meta Platforms is the comfortable leader in the social media industry and only faces competition from a small number of companies.
Microsoft is another big tech stock Buffett doesn’t have in his portfolio, but this omission is more shocking due to Buffett’s long-lasting friendship with Bill Gates. All of those conversations and collaborations between the two billionaires weren’t enough for Buffett to put any money in MSFT stock.
Sure, SoFi Technologies is another tech company, but it’s specifically a fintech firm. Buffett fully understands banks, given his large investments in Bank of America and Capital One. SoFi’s underlying business model is just like any bank’s, but it’s growing at a faster rate while enjoying lower overhead costs. SoFi stock has more than doubled this year.
Walmart used to be a key part of Buffett’s portfolio, but he gradually trimmed it and eventually exited his entire position in 2018 due to Amazon’s e-commerce dominance. While Amazon has been the online shopping leader, its stock has trailed Walmart over the past five years.
Walmart is heading toward a $1 trillion valuation, but its financial growth rates have been lower than Amazon’s growth rates over several quarters. Perhaps Buffett may win in the end by swapping Walmart for Amazon, but the leading retailer has produced much higher returns over the past five years than the e-commerce juggernaut.
Buffett may be avoiding Pepsi stock due to his large stake in Coca-Cola. However, he is also invested in several financial stocks that compete with each other. For instance, his portfolio includes Visa, Mastercard and American Express, which all compete with each other.
However, Buffett’s decision to replace Walmart with Amazon demonstrates his desire to avoid having too many competing companies in his portfolio. Similarly, he doesn’t own any Exxon Mobil shares despite having a large Chevron position.
McDonald’s doesn’t show up in Berkshire Hathaway’s portfolio, making it another shocking exclusion. MCD stock has a respectable yield, a significant moat due to its number of locations and high profit margins. Buffett also regularly eats at McDonald’s, which should give him a better understanding of the company than most people.
However, understanding a company well doesn’t always make it a good investment. MCD stock is up by more than 40% over the past five years, which is good, but Buffett’s top-performing stocks have done much better over the same stretch.
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This article originally appeared on GOBankingRates.com: 7 Surprising Stocks Warren Buffett Refuses To Own — and Why