Identifying the stocks that Warren Buffett owns seems simple: Just pull up Berkshire Hathaway‘s (NYSE: BRK.A) (NYSE: BRK.B) latest 13F filing to the U.S. Securities and Exchange Commission. The filing lists all the stocks in Berkshire’s portfolio. Since Buffett is Berkshire’s biggest individual shareholder, he owns all the stocks too.
However, there is a twist. Some of the companies that are subsidiaries of Berkshire or in which the conglomerate owns shares also hold positions in other publicly traded businesses. Markel (NYSE: MKL), for example, has an equity portfolio with more stocks in it than Berkshire’s portfolio.
Any stock that Markel owns is by default a Buffett stock. With this in mind, here are three top stocks you probably didn’t know Buffett owns.
1. Dollar General
Dollar General (NYSE: DG) isn’t in Berkshire’s portfolio, but it is in Markel’s. Unlike many retail stocks, Dollar General is holding up quite well in the face of soaring inflation. It’s even up year to date, while the S&P 500 is down by a double-digit percentage.
Consumers look for bargains when they’re trying to stretch their dollars. Dollar General thrives in this kind of environment, since the company offers everyday low prices on a wide range of products.
High fuel prices especially work to Dollar General’s advantage. The company has more than 18,000 stores that are within five miles of 75% of the U.S. population. This convenience makes Dollar General even more attractive when it costs so much to drive.
Buffett probably likes Dollar General’s business model, but what about its valuation? Dollar General’s forward earnings multiple is only slightly above Berkshire’s. And with the possibility of a recession on the way, the discount retailer’s earnings prospects could be stronger than those of most Buffett stocks.
Buffett stated in the past that it would be a “mistake” for Berkshire to invest in Microsoft (NASDAQ: MSFT) because of his close personal relationship with Bill Gates. However, Buffett does now own a small stake in the software giant via Berkshire’s position in Markel.
Many tech stocks have performed dismally so far in 2022. Microsoft is no exception, with its shares down more than 20% year to date. But the company’s underlying business remains strong.
Microsoft recently won a much-coveted deal with Netflix to create a new ad-supported option for the video-streaming company. Its Office platform continues to dominate the productivity market.
There are also several cases where Microsoft holds No. 2 positions in growing markets. The most important of these is cloud hosting, with Microsoft Azure standing out as a big growth driver.
Buffett is without question a big fan of insurance companies. Berkshire owns GEICO and General Re. It also owns shares of Globe Life and, of course, Markel, which is a leader in specialty insurance. But you might not have realized that Buffett has a stake in pet insurance as well, thanks to Markel’s position in Trupanion (NASDAQ: TRUP).
This is a stock that seems to have gone to the dogs. Trupanion’s share price has crashed nearly 50% this year. This decline followed a relatively weak gain of 10% in 2021. However, there are some pretty good arguments why Trupanion could be a monster growth stock this decade.
Trupanion has generated revenue growth of more than 20% for 58 consecutive quarters, including 33% year-over-year growth in Q1 2022. The company has been the clear growth leader in pet insurance in recent years. While Trupanion isn’t generating profits, it’s because the company is reinvesting heavily in growing its subscriber base.
Currently, only around 2% of pets in the U.S. and Canada are covered by medical insurance. By comparison, the market penetration rate in Europe is much higher, with 25% of pets covered in the U.K. and 40% in Sweden. Trupanion should have a big opportunity over the long term if it can increase its North American enrollment to the lowest levels seen in Europe.
Keith Speights has positions in Berkshire Hathaway (B shares), Dollar General, Microsoft, and Trupanion. The Motley Fool has positions in and recommends Berkshire Hathaway (B shares), Markel, Microsoft, Netflix, and Trupanion. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.