Buffett's latest watchlist includes two stocks! What is the secret of value investing? Check the performance trend and stock price level.

This time,Focus on the two stocks newly acquired by Mr. Buffett.Check the performance trends and stock price levels of each. What can be seen from there isthe essence of Buffett-style investment. it might be.

Buffett's latest portfolio:Sector Classification
Looking at the holdings of Berkshire Hathaway as of the end of June 2024, the top sector isInformation Technology(with a ratio of 35.2%), followed byFinancial(32.8%),Necessities of life(13.7%),Energy(12.4%) along with energy.

Most of the information technology is by Apple stock. Buffett sold about half of his Apple shares in April-June.However, it remains the top hold position based on market capitalization. The sale of Apple shares is also reflected in the sector's growth and decline rate.For example, compared to the portfolio at the end of March, information technology decreased by 10%. Conversely, financials increased by 6%, and consumer staples and energy each increased by 2%. The stocks Buffett newly acquired belong to these sectors.

Buffett's 'latest portfolio': Individual stock edition
The top 10 holdings in Berkshire Hathaway's portfolio as of the end of June 2024 are as follows.

Performance trends
The company, which has steady earnings growth and a strong market share, has consistently surpassed market expectations. However, the company announced during their earnings report in April this year that they expect growth to slow down, which came as a negative surprise.

The management commented that "growth in this field is slightly slower than expected due to various events happening in consumers' lives."Annual growth rateoutlookAboutEstimated at 2% to 3%This level is significantly below the previous targetof 4% to 5%As a result, the stock price has sharply declined since April.(Note: JSR, excluding the chemical sector constituents of the Nikkei Semiconductor Stock Index (in weight order). Operating profit growth rate forecast, recent dividend yield, and analyst target stock price for Nippon Chemicals are based on Bloomberg data.)(price-to-earnings ratio) is also14 timesIt has decreased to a level of 5 years average of26 timesor the average of the past 10 years, which is30 timessignificantly lower than

It was exactly when Warren Buffett acquired the company's shares for the first time, during a period of sharp decline in stock prices due to a negative surprise. As of the end of June, the percentage of Berkshire Hathaway's portfolio accounted for 0.1%, so it does not seem to be a significant "bet" at the moment. However, it can be said that buying opportunities based on the "Buffett investment method" were taken advantage of, considering the "short-term" (※) performance decline outlook and stock price decline of companies that have secured a certain position in the industry.

(※ It is not certain whether the performance decline will remain short-term, and it is necessary to pay attention to the future performance trends.)

Performance trends
Since fiscal year 2021, the performance has been expanding. In the 2nd quarter of fiscal year 2024 (April-June), both consolidated net sales and net profit recorded their highest ever on a quarterly basis. The increase in net sales reflects the impact of acquisitions in fiscal years 2023 and 2024, as well as a robust organic growth of 12%. The company expects an increase in net sales in both FSG and ETG for the remaining period of fiscal year 2024. The contribution from acquisitions and strong demand for most products is expected to continue.

At the earnings call at the end of May, the management commented that the business environment is favorable. They explained that this is a good situation for the company, as there is a combination of aging of aircraft, demand for air travel worldwide, and inventory reduction. They also indicated that fiscal year 2025 is expected to see a strong resurgence in special products such as defense products. They revealed that the backlog of defense-related businesses has reached its highest ever. They expect continued stable performance expansion in the future.Outlook for continued performance expansionYes.

During the period from April to June this year, when Mr. Buffett newly acquired shares of the company, the company's shares were performing well. It may seem like a completely different investment decision from Alta Beauty, which took the opportunity of a sharp drop in stock prices. However, while Heico's stock price continued to rise, the business outlook had become even brighter. In addition, at the current time, Heico's PE ratio is 52 times, which is the average PE ratio for the past 5 years is 59 times, and the average PE ratio for the past 10 years is(Note: JSR, excluding the chemical sector constituents of the Nikkei Semiconductor Stock Index (in weight order). Operating profit growth rate forecast, recent dividend yield, and analyst target stock price for Nippon Chemicals are based on Bloomberg data.)approximately52 timesPER of 59 timesthe average PER for the past 5 years is 59 timesthe average PER for the past 10 years is49DoubleWhile not particularly undervalued compared to others, nor overpriced, buying companies with anticipated stable performance at a "reasonable" price could be considered one pattern of "value investing".