Everyone is familiar with Warren Buffett’s track record at Berkshire Hathaway (NYSE:BRK-A, BRK-B). Since he became CEO, he has generated returns of 4.38 million percent for investors, a compounded annual growth rate of 19.8%. That’s almost exactly double the returns of the S&P 500. If you really want to reap the rewards, grab some Berkshire subsidiary stocks.
What is only just becoming more noticed is Buffett’s hidden, less-known subsidiary that houses a separate investment portfolio. Acquired when he bought General Re in 1998, New England Asset Management (NEAM) has nearly $70 billion in assets under management (AUM). That includes an investment portfolio worth $645.5 million.
Surprisingly, the biggest holdings in NEAM are actually exchange-traded funds (ETF). The SDPR S&P 500 ETF Trust (NYSEARCA:SPY) is the biggest holding with over 184,000 shares valued at $96.4 million or 15% of the portfolio’s total.
The second-biggest position is the iShares Core S&P 500 ETF (NYSEARCA:IVV). The 78,000 shares held are valued at $41.1 million or more than 6% of the total. Although it ranks ninth on the list, NEAM also owns over 21,000 shares of the Vanguard S&P 500 ETF (NYSEARCA:VOO) worth $10.1 million. That means nearly one-quarter of these Berkshire subsidiary stocks are invested in the broad market index.
Before we even get to an individual stock, the billionaire investor also owns an international stock ETF, a total market ETF, and an ETF showcasing high-yield dividend stocks. There are also preferred shares from several banks. A regular investor could learn a lot about building his own portfolio by looking at NEAM.
However, we want to see the stocks owned by this Berkshire subsidiary. The three stocks below are its top stock holdings.
Top Berkshire Subsidiary Stocks: JPMorgan Chase (JPM)
The biggest individual stock position in New England Asset Management is JPMorgan Chase (NYSE:JPM). It owns 64,375 shares valued at $12.9 million, which is good enough for 2% of the portfolio’s total, good for a seventh-place ranking overall.
JPMorgan, of course, is the premier bank in the country and arguably the world. It is not just a leading investment and commercial banking center but also the largest credit card issuer and a top asset and wealth manager. It had nearly $4 trillion in AUM at the end of 2023.
The bank stock is up 17% in 2024 and 47% over the past year. Yet if investors are thinking of buying the stock to ride the wave, they may want to follow CEO Jamie Dimon’s advice. He told shareholders at the annual meeting, “I want to make it really clear, OK? We’re not going to buy back a lot of stock at these prices.” If Dimon thinks JPMorgan stock is expensive, who are you to argue?
Qualcomm (QCOM)
Next up is Qualcomm (NASDAQ:QCOM), the semiconductor stock best known for its mobile chipsets. Increasingly, though, it is becoming more immersed in artificial intelligence (AI). Its Snapdragon 8S Gen 3 chip released last year offers the power to handle the complex processing task that AI demands on Android phones including Samsung‘s Galaxy S24 series and smartphones from China’s OnePlus and Xiaomi.
The Snapdragon chip can support dozens of generative AI models. Those include Meta Platform‘s (NASDAQ:META) Llama 2 and Alphabet‘s (NASDAQ:GOOG, GOOGL) Google Gemini.
Also, Microsoft (NASDAQ:MSFT) just announced a new series of personal computers running its Copilot AI chatbot that are powered by Qualcomm’s Snapdragon X Elite chips. While some initial reviews are mixed — the chip excels at AI tasks, for instance, but lags in most other things — this is a launching pad for further integration.
New England Asset Management owns 58,996 shares valued at $10 million, good for a 1.6% share of the portfolio.
NXP Semiconductors (NXPI)
The third largest stock holding in NEAM is NXP Semiconductors (NASDAQ:NXPI), the maker of near-field communication (NFC) chips. It seems Buffett’s investment managers aren’t as reticent at investing in tech stocks as much as the Oracle himself. They own 39,635 shares of the company worth $9.8 million and represent 1.5% of NEAM’s portfolio.
NXP is helping to develop the next generation of smart cars that use its chips to communicate with one another and with objects in the environment around them. The automotive segment makes up 58% of total revenue. Revenue, though, was down across the board for the chipmaker in the first quarter.
That hasn’t slowed NXP Semiconductors stock, which is up 22% this year and 63% higher over the last 12 months. The chipmaker has generated tremendous total returns for investors over the past decade of nearly 400%. In 2018 it started paying a dividend. Since then it has rewarded shareholders by growing it at an incredible 27% compounded annual growth rate.
Because automobiles are essentially rolling computers these days, look for NXP Semiconductors to play an increasingly important role in their development.
On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.