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 Charter Communications, Inc. (NASDAQ:CHTR) stands against other Warren Buffett’s longest-held stocks.
Warren Buffett has cemented his legacy as Wall Street’s most successful investor. During the high-flying stock market of the 1960s, he leveraged his investment partnership to acquire Berkshire Hathaway, a struggling New England textile company at the time. Today, the firm is a vastly different entity, boasting a diverse range of businesses from Geico insurance to BNSF Railway, an equity portfolio exceeding $266 billion, and an enormous cash reserve of $325.2 billion. Decades of strong returns have built Buffett’s unmatched track record. Since he took over in 1965, the company’s shares have delivered an annualized gain of 19.8%.
Buffett has famously stated that his ideal holding period for a stock is “forever”. True to his word, the Oracle of Omaha has held onto some of his favorite stocks for the long haul, allowing them to deliver steady share performance and generate passive income for his portfolio over time. Moreover, market analysts and investors alike have consistently praised Buffett’s disciplined, long-term approach to investing, more so now that his firm has become the latest non-tech firm to surpass a $1 trillion market cap, highlighting Buffett’s stock-picking abilities.
However, despite strong market performance through much of 2024, Buffett seems to have adopted a more defensive stance. Concerned about inflated valuations amid high interest rates and worsening economic conditions, he has offloaded significant holdings in companies whose valuations have surged too high. Billionaire investor David Einhorn of Greenlight Capital echoed this in his hedge fund’s quarterly letter, noting Buffett’s cautious approach:
“One could argue that sitting out bear markets has been the underappreciated reason for his outstanding long-term returns. It is therefore noteworthy to observe that Mr. Buffett is again selling large swaths of his stock portfolio and building enormous cash reserves.”
Over the past two years, Buffett has been an active net seller of stocks. His firm offloaded a total of $36.1 billion in stocks during the third quarter, marking the eighth consecutive quarter in which Berkshire was a net seller of equities. At the company’s annual shareholder meeting in May, Buffett mentioned the possibility of a future rise in the corporate tax rate.
Moreover, in his 2023 letter, Buffett also addresses common questions about Berkshire, including whether the company can continue to achieve the same level of outperformance as in the past:
“There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others. Some we can value; some we can’t. And, if we can, they have to be attractively priced. Outside the U.S., there are essentially no candidates that are meaningful options for capital deployment at Berkshire. All in all, we have no possibility of eye-popping performance. Nevertheless, managing Berkshire is mostly fun and always interesting. On the positive side, after 59 years of assemblage, the company now owns either a portion or 100% of various businesses that, on a weighted basis, have somewhat better prospects than exist at most large American companies.”
Our Methodology
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).
A line of cable boxes and modern televisions, representing the company’s video services.
Charter Communications, Inc. (NASDAQ:CHTR)
Warren Buffett’s First Major Purchase: 2016
Berkshire Hathaway’s stake in Q3 2024: $914.5 million
Charter Communications, Inc. (NASDAQ:CHTR), a leading broadband and cable operator, provides services to both residential and commercial customers. While competition in the broadband market has slowed core subscriber growth, the company is finding success in rural areas due to a government initiative aimed at expanding broadband access and its push into mobile services.
Earlier this September, Citi upgraded its rating on Charter Communications, Inc. (NASDAQ:CHTR) from a Sell to Neutral. While recent improvements in Charter’s operating performance contributed to the upgrade, the key factor was its current valuation. Citi’s note highlighted that while broadband and video volumes are still facing “headwinds,” the company’s evolving product mix is expected to “moderately improve EBITDA generation over the coming years.” Additionally, Charter’s cost-cutting initiatives have already delivered strong results.
At the start of October, the company teamed up with Comcast to offer its cable TV customers free access to the Peacock streaming service, aiming to retain users in an increasingly streaming-focused market. Moreover, in late September, Charter Communications, Inc. (NASDAQ:CHTR) explored a potential merger with Liberty Broadband to acquire Alaskan telecom leader GCI.
Parnassus Value Equity Fund stated the following regarding Charter Communications, Inc. (NASDAQ:CHTR) in its first quarter 2024 investor letter:
“During the quarter, we added new positions in Pfizer, NICE and Charter Communications, Inc. (NASDAQ:CHTR). NICE is a leading cloud contact center software company. Charter’s stock had fallen due to near-term concerns, which we believe will not have a major impact on the long-term value of the business. Charter Communications has had several issues that created short-term uncertainty. We assessed that these issues have limited impacts on the long-term value of the business and initiated a position to take advantage of the stock’s historically low valuation.”
Overall, CHTR ranks 10th on our list of Warren Buffett’s longest-held stocks. While we acknowledge the potential of CHTR, our conviction lies in the belief that 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 CHTR 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.