Types of Investments Warren Buffett Likes

Warren Buffet's investment approach made him one of the greatest investors of all time. The Oracle of Omaha (a nickname for Warren Buffet) is known for his long term investments in companies: those that are trading below their intrinsic value, have a good business moat, and endowed with a creative long term management strategy.

Moreover, we have to note than Warren Buffet does not, as any other investor, just buy shares and move forward to hunt other business opportunities. Indeed, by the time he acquires a company, he walks into the management board room and starts working with them to sharpen the company's vision and strategic management.

By looking at Berkshire Hathaway's investment portfolio, we can clearly see what are the sectors Warren Buffet prefers for his long term investments. According to a study done by Bespoke Investment Group, the two biggest holdings of Warren Buffet are in the Financial and Consumer Staples sectors. Indeed, these two sectors together represent 88% of his total portfolio with 45.1% for the financial sector and 43.1% for the consumer staples sector. The rest of the sectors are: Health (5.2%), Energy (4.0%), Consumer Services (1.4%) and Industrials (1.2%). Another thing we can notice by looking at these percentages is that Warren Buffet has both very big holdings and very small holdings in his portfolio.

Now let's look at the reasons behind investing at these sectors.

Financials
In this sector, Warren Buffet is investing respectively about 21.4% and 13% of his total portfolio in Wells Fargo and American Express. His investments at this sector allowed him, besides their high yields, to have access to cheap cash inflow which allowed him to finance high-yielding convertible preferred stocks.

Consumer Staples
For this sector, the most famous Warren Buffet's holding is Coca-Cola with about 23.4% of his portfolio. In fact, Coca-Cola is the most favorite company, as it answers fully his stock picking requirements: low business risk, high profit margins, high cash flows, and high dividend payouts.

Health Care Sector
Due to reasons such as: population aging, the emergence of new diseases, the increase of health care awareness, insurance health coverage, Buffet believes in the long term growth of this sector, along with the high profit margin that can be derived from research and development and hence patents.

Oil & Gas
With respect to this sector, Warren Buffet expressed his belief that demand for energy would remain strong for the coming 10 years, despite the shortage in oil supplies and the need to find alternative sources of energy. Warren Buffet has bought stock from ConocoPhilips which is registering larger earnings than expected due to the increase in oil prices this last period.

Ultimately, during the financial crisis, Warren Buffet has suffered huge losses for which it was paramount to make adjustments to his stock holdings. However, his overall sector investment weightings remained the same besides keeping his major investment pattern which relies on extensive research and evaluation of his future investments' strategic management.