How Warren Buffett built his fortune

Warren Buffett is considered by many to be the best investor of all time. We examine how much Buffett is worth and how he made his fortune.

Warren Buffett
Warren Buffett’s net wealth exceeds $100bn  
(Image credit: © Daniel Acker/Bloomberg via Getty Images)

Warren Buffett is considered by many to be the best investor of all time. When he set out on his own in the mid-1950s, investors entrusted him with just $100,000 (around $1m today) of their capital. Over the course of the past 70 years, he has grown this capital into a conglomerate with just under $1trn of assets.

Buffett started investing when he was 11 years old, buying six shares of Cities Service preferred stock (three shares for himself and three for his sister) at a cost of $38 per share. He made a small profit on this investment and went on to build several other businesses.

He filed his first tax return at just 13 years of age. It was for the 1944 calendar year. He’d earned $592.50 in total, more than half of it from a paper round, the rest from investments. (He paid $7 in tax). The young businessman attended the University of Nebraska before moving to Columbia University, where he met his mentor, professor Benjamin Graham.

Graham essentially wrote the book on value investing and he also managed his own investment firm, which the young Buffett joined when he left university. Unfortunately, Graham wound up the venture a few years after the young entrepreneur joined and he was soon back home in Omaha. Soon afterwards, a group of family and friends asked Buffett to invest their savings in the stockmarket. The Buffett Partnerships, as they came to be known, earned a 31.6% annual return before fees from 1957 to 1968 compared to 9.1% for the Dow Jones Industrial Average. Buffett used a similar investment strategy to the one pioneered by Graham.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The Warren Buffett portfolio and the rise of Berkshire Hathaway

Buffett started buying shares in Berkshire Hathaway for his partners’ portfolios in the early 1960s. At the time, Berkshire was a struggling textile business. Its peers had a much lower cost base so they could undercut the firm on price. As losses mounted, the corporation’s market value fell below the value of the assets on its balance sheet.

The investor wanted Berkshire to start closing its manufacturing facilities and return the cash to its shareholders, which would have produced a fat, risk-free return for all of its shareholders. However, Berskhire’s management declined to follow his plan – so Buffett decided to take control of the business himself.

Buffett used Berkshire’s capital to buy up other firms, mainly companies in the insurance sector. In 1967, he bought Omaha-based insurer National Indemnity Company for $8.6m, giving him his first foothold in the industry. Not only was National Indemnity a well-run profitable insurer, but it also owned an investment portfolio, a valuable source of capital.

Today Berkshire Hathaway owns more than 60 subsidiaries, employing more than 300,000 people. It owns insurer Geico, battery maker Duracell, restaurant chain Dairy Queen, BNSF, one of the largest railroads in the US, and a utility giant, Berkshire Hathaway Energy – that’s all alongside a $300bn portfolio of equities.

Warren Buffett’s net wealth exceeds $100bn

At the same time, Buffett has built a huge fortune for himself. He is one of the richest people in the world (the exact position fluctuates but he’s generally in the top five) with a net worth of $112bn.

Virtually all of Warren Buffett’s net wealth is tied up in Berkshire Hathaway stock. Since he gained control of the business in 1965, the shares have returned 20.1% per annum compared to 10.5% for the S&P 500.

The top stocks in Warren Buffett’s portfolio

Buffett’s investing style can be defined by one of his best-known quotes, “Rule no. 1: Never lose money. Rule no. 2: Never forget rule one.”

Since the 1950s, the investor has always sought to find investment opportunities with a low chance of failure, but high return potential. Buffett seeks to minimise the risk of failure by sticking to companies in sectors that he knows well. “Risk comes from not knowing what you are doing,” as he puts it. He likes to own companies with an enduring competitive advantage, such as a well-known brand or substantial economies of scale, and will not pay over the odds for any business. As a value investor, he prefers to buy when other investors are selling.

In 2008 when the global financial sector was teetering on the edge of collapse, Buffett invested $5bn of Berkshire’s cash in Goldman Sachs, at extremely favourable terms which would have been impossible for an ordinary investor to access. The bet eventually yielded a profit of more than $3bn for the conglomerate. Around the same time he also ploughed cash into Dow Chemical, Bank of America and General Electric.

Despite this impressive bet, Buffett generally does not try to time the market or speculate on the price of securities. He believes that investors should approach buying a stock with the same mindset as if they were buying the entire business. He has encouraged others to “own your stocks as an investment – just like you’d own an apartment, house or a farm – look at them as a business.”

Here are the top 20 equity holdings in Berkshire Hathaway’s equity portfolio (which is managed by Buffett) as reported at the end of March according to the firm’s 13F regulatory filing:

Swipe to scroll horizontally
CompanySymbolHoldingsValue% of portfolio
Apple IncAAPL911,347,617$155,564,138,000.0042.79%
Bank of America CorpBAC1,032,852,006$41,636,348,000.0011.45%
American Express CompanyAXP151,610,700$28,351,201,000.007.80%
Chevron CorporationCVX159,178,117$25,918,973,000.007.13%
Coca-Cola CoKO400,000,000$24,799,999,000.006.82%
Kraft Heinz CoKHC325,634,818$12,826,755,000.003.53%
Moody’s CorporationMCO24,669,778$8,323,829,000.002.29%
Occidental Petroleum CorporationOXY143,162,392$7,737,804,000.002.13%
US BancorpUSB144,046,330$6,719,111,000.001.85%
Activision Blizzard, Inc.ATVI74,187,400$5,152,292,000.001.42%
Davita IncDVA36,095,570$4,082,770,000.001.12%
HP IncHPQ121,092,418$3,792,480,000.001.04%
Bank of New York Mellon CorpBK74,346,864$3,591,100,000.000.99%
Kroger CoKR57,985,263$3,326,615,000.000.92%
Citigroup IncC55,244,797$2,945,319,000.000.81%
Verisign, Inc.VRSN12,815,613$2,850,961,000.000.78%
General Motors CompanyGM62,045,847$2,713,886,000.000.75%
Paramount Global Class BPARA68,947,760$2,606,915,000.000.72%
Itochu CorporationITOCF81,304,200$2,330,991,414.000.64%
Charter Communications IncCHTR3,828,941$2,088,764,000.000.57%
Liberty Sirius XM Group Series CLSXMK43,208,291$1,975,915,000.000.54%
Visa IncV8,297,460$1,840,128,000.000.51%, Inc.AMZN533,300$1,738,531,000.000.48%
Aon PLCAON4,396,000$1,431,470,000.000.39%
Mastercard IncMA3,986,648$1,424,748,000.000.39%
Snowflake IncSNOW6,125,376$1,403,507,000.000.39%
Celanese CorporationCE7,880,998$1,125,958,000.000.31%
Liberty Sirius XM Group Series ALSXMA20,207,680$923,692,000.000.25%
McKesson CorporationMCK2,921,975$894,504,000.000.25%
Nu Holdings LtdNU107,118,784$826,957,000.000.23%
T-Mobile Us IncTMUS5,242,000$672,811,000.000.19%
Globe Life IncGL6,353,727$639,185,000.000.18%
Markel CorporationMKL424,343$620,034,000.000.17%
Liberty Media Formula One Series CFWONK7,722,451$539,336,000.000.15%
Store Capital CorpSTOR14,754,811$431,283,000.000.12%
Ally Financial IncALLY8,969,420$389,990,000.000.11%
Floor & Decor Holdings IncFND4,780,000$387,180,000.000.11%
StoneCo LtdSTNE10,695,448$125,137,000.000.03%
Verizon Communications Inc.VZ1,380,111$70,303,000.000.02%
Marsh & McLennan Companies, Inc.MMC404,911$69,005,000.000.02%
Royalty Pharma plcRPRX1,496,372$58,299,000.000.02%
Johnson & JohnsonJNJ327,100$57,972,000.000.02%
Procter & Gamble CoPG315,400$48,193,000.000.01%
Diageo plcDEO227,750$41,650,920.000.01%
Mondelez International IncMDLZ578,000$36,287,000.000.01%
Liberty Latin America Ltd Class ALILA2,630,792$25,518,000.000.01%
Vanguard 500 Index Fund ETFVOO43,000$17,852,000.000.00%
SPDR S&P 500 ETF TrustSPY39,400$17,795,000.000.00%
United Parcel Service, Inc.UPS59,400$12,739,000.000.00%
Liberty Latin America Ltd Class CLILAK1,284,020$12,314,000.000.00%
Rupert Hargreaves

Rupert was the former Deputy Digital Editor of MoneyWeek. He's an active investor and has always been fascinated by the world of business and investing. 

His style has been heavily influenced by US investors Warren Buffett and Philip Carret. He is always looking for high-quality growth opportunities trading at a reasonable price, preferring cash generative businesses with strong balance sheets over blue-sky growth stocks. 

Rupert has freelanced as a financial journalist for 10 years, writing for several UK and international publications aimed at a range of readers, from the first timer to experienced high net wealth individuals and fund managers. During this time he had developed a deep understanding of the financial markets and the factors that influence them. 

He has written for the Motley Fool, Gurufocus and ValueWalk among others. Rupert has also founded and managed several businesses, including New York-based hedge fund newsletter, Hidden Value Stocks, written over 20 ebooks and appeared as an expert commentator on the BBC World Service. 

He has achieved the CFA UK Certificate in Investment Management, Chartered Institute for Securities & Investment Investment Advice Diploma and Chartered Institute for Securities & Investment Private Client Investment Advice & Management (PCIAM) qualification.