What Warren Buffett Considers As His 'Secret Sauce' After 58 Years Of Managing Berkshire Hathaway

Warren Buffett has inspired a generation of investors with his tested methodology of investing in value stocks and holding them for the long term. The fact that he features in the top five of the billionaires’ list is a testament to his success with his investments through Berkshire Hathaway, Inc, a company he has been managing since 1964.

What Happened: Buffett, who goes by the moniker the “Oracle of Omaha,” however, has been very modest about his success. “In 58 years of Berkshire management, most of my capital-allocation decisions have been no better than so-so,” the billionaire said in his annual letter to Berkshire shareholders in February.

At times, Buffett was rescued from facing the impact of some bad bets by “very large doses of luck,” he had said, citing Berkshire’s escape from near disasters with shares of U.S. Airlines and bond trading firm Salomon.

Berkshire’s satisfactory performance over the years has been due to a dozen “truly good decisions,” which he said could be made once every five years, and the forgotten advantage that favors long-term investors, he said.

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Secret Sauce: Buffett also shared his secret sauce by touting his investments in the Coca-Cola Company and American Express Company.

He noted that in 1994, Berkshire completed its seven-year purchase of the 400 million shares of Coca-Cola which are valued at $1.3 billion as of February. Cash dividends from the beverage giant continue to come in regularly, with growth occurring every year, Buffett had said.

On American Express, Buffett noted that Berkshire’s purchases of Amex were completed in 1995 at $1.3 billion. He expects dividends from the financial services company to keep growing.

“These dividend gains, though pleasing, are far from spectacular. But they bring with them important gains in stock prices,” Buffett had said.

At the end of 2022, Berkshire’s Coca-Cola and Amex investments were valued at $25 billion and $22 billion, respectively, with both accounting for about 5% each of the company’s net worth, he had said.

“The lesson for investors: The weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders,” the legendary investor had said.

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Photo: Fortune Live Media on Flickr

This story was originally published on Feb. 25, 2023.