🗞 Warren Buffett's Five Best Investments Ever

Happy Sunday!

Here’s what’s on the docket for this week’s newsletter:

• 💼 Warren Buffett’s 5 Best Investments Ever

• 🏡 Zillow's Steady Progress In Winning Real Estate

Let’s dive in!

Warren Buffett’s 5 Best Investments Ever

Earlier this month, legendary investor Warren Buffett announced that he will be stepping down as CEO of Berkshire Hathaway at the end of the year. To celebrate his upcoming retirement, let’s take a look back at his unrivaled track record.

Over the last 60 years, Buffett has earned investors a 5,502,284% return, compared to just 39,000% for the market.

To put that in context, $10,000 invested in Berkshire when Buffett took over would be worth ~$550 million today. If that isn’t impressive enough, consider this.

If Berkshire Hathaway shares dropped 99.4% tomorrow, Buffett still would have outperformed the index!

How many other companies can say that?

Here are 5 of Buffett’s best investments over the years:

1. GEICO

After following the company for nearly 25 years, Buffett first bought shares of GEICO for Berkshire Hathaway in 1976.

Despite being attracted to GEICO’s unique model of bypassing agents and selling directly to customers, Buffett never got comfortable with GEICO’s valuation until they were on the edge of bankruptcy in 1976.

By 1980, Berkshire owned 33% of the company, and in 1996 Berkshire bought out the remaining shares, making it a wholly owned subsidiary.

Between 1980 and 1996, Berkshire’s stake appreciated a whopping 5,136%. But perhaps more importantly, once GEICO was consolidated, Buffett also gained the ability to invest the float.

Since GEICO was typically profitable in their underwriting, that meant Buffett was able to bring in billions of dollars in investable premiums each year at a negative cost of capital. This has been an advantage for Berkshire ever since.

2. Apple

At this year’s Berkshire Hathaway shareholder meeting Warren Buffett said "I’m somewhat embarrassed to say that Tim Cook has made Berkshire a lot more money than I’ve ever made."

Berkshire first started buying Apple in Q1 of 2016. And when they bought, they bought big.

By 2018, Berkshire owned more than 5% of Apple’s available shares and thanks to strong price performance that accounted for 48% of all Berkshire's US holdings by 2020.

Over the last 9 years, Apple has returned more than 800% for investors resulting in a 29% annual growth rate.

3. BYD

Inspired by Li Lu, Berkshire purchased roughly 10% of the Chinese company BYD in 2008.

At the time, BYD was still just a little-known maker of electric batteries. Today, they’re the largest electric vehicle company in the world.

Berkshire’s original cost was estimated to be about $230 million. By the time Buffett first slashed his stake 2023, the position was worth about $11 billion. A 27% CAGR over 15 years.

4. American Express

American Express has quietly become more than a 100-bagger for Berkshire.

Buffett made his first large scale investment in American Express in 1991 when he bought about 5% of the company for $300 million.

Thanks to the company’s commitment to share buybacks, Berkshire now owns 21.5% of the company and they haven’t had to buy a single additional share to do so.

Today, that stake is worth roughly $44 billion, up more than 146x from Berkshire’s original cost basis.

5. Coca-Cola

Buffett bought his 6.2% Coca-Cola stake for $1.3 billion in 1988.

Today, the stake is worth approximately $29 billion. Nice price appreciation for sure, but that alone wouldn’t make it one of his best investments.

Berkshire has also collected a hefty amount of dividends along the way. In fact, to date, he has earned about $11.5 billion in cumulative dividends, or ~9x his original cost.

Berkshire currently collects 63% of their original cost every year in dividends.

Partner Spotlight: Asymmetric Investing

Zillow is winning in the single biggest asset class in the world

The “Super App” strategy to become the go-to place for housing searchers (for sale and rentals) is working, and competitors are capitulating.

CoStar Group is reconsidering its investment in Homes.com, real estate agent groups are signing on to Zillow’s listing transparency efforts after trying to cut Zillow out by privately listing homes, and Redfin is leaning on Zillow to provide rental listings.

Supply and demand are aggregating to Zillow, and that’s what we want to see.

The Housing Super App

In any Zillow earnings report, we want to see three things:

• Growing share of “for sale” revenue

• Growth in mortgages

• Growth in rentals

We got all three in Q1 2025.

For Sale

Residential revenue overall is held back by a slow housing market that may be here for a while. But the trends are moving in the right direction

We also get small tidbits about Zillow outgrowing the market, which are showing that share is up and the take rate is increasing.

“For Sale revenue grew 8% year over year to $458 million in Q1, above the residential real estate industry’s year-over-year total transaction value growth of 3% as reported by NAR and 6% according to industry data tracked and estimated by Zillow. On a trailing 12-month basis, For Sale revenue per total transaction value at the end of Q1 was 10.2 basis points, compared with 9.7 basis points for the same period in 2024.”

I wouldn’t call these blowout numbers, but unless we get a low interest rate environment again, small wins will do.

In mortgages, you can see more success in attracting buyers to a more holistic solution. Zillow has said that most buyers start by looking for a mortgage, so if the company can win that business, it’ll be big for the rest of the Super App strategy because they may choose moving services, insurance, and more.

Meme of the Week

This is your friendly reminder to do your homework!

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