Berkshire Hathaway has regained its ranking as the favourite stock pick among US and Canadian multimillionaires, beating Apple and fending off the increasing preference for exchange-traded funds.
Members of Tiger 21, a New York-based group of wealthy investors, selected Berkshire in an annual survey of preferred investments scheduled to be released on October 22.
Apple, which had held the No 1 spot the last two years, slipped to No 2.
“The bloom is off of Apple,” Michael Sonnenfeldt, founder and chairman of Tiger 21, said in an interview. “For people who held Berkshire Hathaway it’s held its appeal, but for Apple, a lot of people who were on that ride have realised that perhaps the best days are behind it.”
Apple’s share price has fallen by more than one-fourth from its September 2012 record high as the Cupertino, California-based company battles lower-cost rivals and seeks to prove it can innovate without co-founder Steve Jobs, who died in 2011.
The Berkshire choice shows members’ satisfaction with Warren Buffett’s investing strategy even as the 83-year-old chief executive officer declines to publicly identify a successor.
Qualcomm, the biggest maker of chips for mobile phones, was the other individual stock among the top five. The San Diego-based company surged to No 4 from No 20 last year.
And for the first time, the top five included two exchange-trade funds (ETFs): the iShares MSCI EAFE Index Fund was No 3 and the SPDR S&P 500 ETF Trust was No 5.
Berkshire, based in Omaha, Nebraska, soared in its first 25 years under Mr Buffett as he transformed a textile maker into an insurer and placed winning bets on stocks such as Capital Cities/ABC and Coca-Cola. More recently, he has expanded by buying whole companies such as the railroad Burlington Northern Santa Fe.
As of midweek, Berkshire stock had risen 31 per cent this year, compared with a 22 per cent gain in the Standard & Poor’s 500 Index. The stock had dropped to No 3 in last year’s survey after being No 2 in 2011 and No 1 in 2010.
Tiger 21 is a network of 220 entrepreneurs, investors and executives who have at least US$10 million in investable assets each and more than $20 billion combined. Members, whose average age is 55, meet monthly in seven cities in the US and four in Canada to share ideas. They pay annual membership fees of $30,000.
Members had, on average, 24 per cent of assets in stocks, 21 per cent in real estate, 19 per cent in private equity, 15 per cent in fixed income, 11 per cent in cash, 8 per cent in hedge funds, 1 per cent in commodities and 1 per cent in miscellaneous investments as of September 30, according to a separate report from the group.
Tiger 21’s members listed Chickasaw Capital Management, based in Memphis, Tennessee, and New York-based Neuberger Berman Group’s Rachlin Group as two of their favourite money managers. Both invest in income-producing master limited partnerships.
Tiger 21’s survey was based on responses from more than 70 members collected in May through July.
* Bloomberg News