We recently published a list of Warren Buffett’s 10 Longest-Held Stocks. In this article, we are going to take a look at where Visa Inc. (NYSE:V) stands against other Warren Buffett’s longest-held stocks.
Known as the Oracle of Omaha, Warren Buffett will undoubtedly go down as one of the greatest and most prosperous value investors in history. During the booming stock market of the 1960s, the billionaire investor used his investment partnership to purchase Berkshire Hathaway, a struggling textile company in New England, which now stands as a global titan.
Buffett has often underlined the need to fully know the internal operations of a company before making any investments. His strategy focuses on finding companies with strong, scalable models that are ready for expansion and market leadership, as well as those that have much to gain from a subsequent increase in stock value. Both investors and market analysts have frequently praised this methodical, long-term investment strategy, particularly in light of Berkshire becoming one of the most recent non-tech companies to reach a $1 trillion market capitalization.
However, despite a generally strong market performance for much of 2024, Buffett appears to have shifted towards a more defensive stance. As interest rates climbed and economic conditions weakened, Buffett significantly reduced his holdings in companies experiencing rapid valuation increases. By late 2024, Berkshire had amassed over $325 billion in cash and cash equivalents, predominantly held in U.S. Treasury bills. This suggested that Berkshire avoided making major investments in popular stocks, even during periods of market optimism. That said, Warren Buffett’s decision to hoard cash might not be a random one. In fact, it mirrors strategies he has used in the past during previous financial downturns. As an example, the billionaire adopted a somewhat similar approach at the onset of the dot-com bubble in the early 2000s and again in the lead-up to the 2007-2008 financial crisis. In both these instances, Buffett foresaw market turbulence and positioned Berkshire to navigate the challenges by maintaining substantial liquidity.
Warren Buffett has repeatedly stated that he is not a fan of cryptocurrency. During Berkshire’s 2018 annual shareholder meeting, Buffett called Bitcoin “probably rat poison squared.” In Berkshire’s 2022 shareholder meeting, the billionaire once again stated:
“If you told me you own all of the Bitcoin in the world and you offered it to me for $25, I wouldn’t take it because what would I do with it? I’d have to sell it back to you one way or another. It isn’t going to do anything.”
Recent reports, however, indicate that the Oracle of Omaha seems to be softening his stance on cryptocurrencies. Berkshire has invested in Nu Holdings, a digital banking company based in Brazil that supports the cryptocurrency market and operates its own platform. In a 2021 Series G funding round, Buffett’s company contributed $500 million, followed by another $250 million. Nubank Crypto, Nu’s cryptocurrency platform, was launched in 2022 and supports Bitcoin, Ethereum, and Polygon. Berkshire’s stake in Nu increased from 0.1% in the fourth quarter of 2022 to 0.4% in the third quarter of fiscal 2024.
To create our list of Warren Buffett’s longest-held stocks, we analyzed his Q3 2024 investment portfolio and selected stocks that he has consistently held for the longest duration. These figures were sourced from the Insider Monkey Database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Warren Buffett’s First Major Purchase: 2011
Berkshire Hathaway’s stake in Q3 2024: $2.28 billion
Visa Inc. (NYSE:V) is a pioneer in digital payments that connects 4 billion account holders to over 130 million merchants and 14,500 financial institutions in more than 200 markets. Thus, Visa Inc. (NYSE:V) is considered a major force in the world economy. Just last year, the Visa network processed 639 million transactions per day, or 234 billion transactions in total.
Visa Inc. (NYSE:V) recently enacted a strategic investment in Nigerian fintech company Moniepoint, exhibiting the company’s commitment to promoting the growth of small and medium-sized businesses across the African continent. Furthermore, Visa Inc. (NYSE:V) purchased Featurespace, a company that specializes in using artificial intelligence technology to secure payments. Visa hopes that the acquisition will strengthen its fraud detection and risk-scoring capabilities.
On January 24, Piper Sandler raised its target price for Visa Inc. (NYSE:V) from $322 to $368, maintaining an Overweight rating. It’s expected that the company will continue to work on incorporating AI into its offerings, particularly with the addition of GenAI to its technology stack and upgrades to Visa Account Attack Intelligence (VAAI). Piper Sandler analysts believe that these moves will eventually allow Visa Inc. (NYSE:V) to reduce its fraud losses even further.
Mar Vista Global Strategy stated the following regarding Visa Inc. (NYSE:V) in its Q3 2024 investor letter:
“After lagging the broader markets over the last one, three, and five years, we believe Visa Inc.’s (NYSE:V) stock now reflects a more conservative and realistic expectation for future cash flow growth. The electronic transaction toll-taker has long enjoyed a highly defensible network effect that connects global buyers and sellers and scale advantages that keep upstart competitors from disrupting the industry’s economics. At the same time, Visa directly benefits from the secular trend of replacing cash with e-payments. Penetration rates and transaction volumes in developed markets will inevitably slow over the next five years yet we expect Visa revenues to grow 8-10% over our investment horizon. Key value drivers remain global consumer spending growth, e-transaction penetration, “new flows” expansion in areas like business-to-business transactions, and lastly, value-added client service growth.
Overall, V ranks 5th on our list of Warren Buffett’s longest-held stocks. While we acknowledge the potential of V, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than V but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.