Investing Like a Billionaire: Buffett and Icahn’s Energy Investments

In recent quarters, Warren Buffett’s overall allocation in the sector has declined, going from 7.82% in the fourth quarter of 2013 to 6.33% in Q1 and 5.72% in Q2. He has instead increased his weighting in financials, a longtime Buffett favorite, including companies like Wells Fargo and American Express.

It’s worth noting that Buffett’s recent sells – namely, ConocoPhillips and Phillips 66 – are also the top performers in the group, the former climbing 50.21% from Q1 2013 to Q2 2014, and the latter 59.04% in the same period. In other words, the billionaire has cashed out for profits.

Icahn Energy Picks Lose Ground to Better Performers

Carl Icahn’s energy bets are long and large and, like Buffett’s, concentrated on a handful of companies: CVR Energy (CVI), Talisman Energy (TLM), CVR Refining (CVRR) and iBillionaire Index components Transocean (RIG) and Chesapeake Energy (CHK). The billionaire has maintained his positions in the aforementioned companies in recent quarters, with the exception of CVRR Refining, of which he sold nearly a million shares in Q2. In terms of portfolio allocation, though, energy has been losing ground to other and perhaps more lucrative positions.

While the energy sector comprised 35.85% of Icahn’s equity portfolio in Q1 2013, as of this most recent quarter, it represented just 19.26% of his holdings. Consumer discretionary, however, has gone from 13.23% to 20.68%, and technology from 3.91% to 16.59%.

With the exception of Chesapeake Energy, the price of which climbed over 70% from the start of 2013 through mid-2014, Icahn’s energy picks have had an average performance over the past six quarters.

Some of the billionaire’s other picks, on the other hand, have performed much better. The price of Apple, of which Icahn most recently reported holding 52.76 million shares, climbed +26.35% from the start of the first quarter of 2013 to the end of the second quarter of this year. Herbalife, of which the billionaire holds 17 million shares, rose 136.66%, and American Railcar Industries is up 110.20%.

Just how bullish are Buffett and Icahn when it comes to energy? Enough to hold onto a set of core companies, but not so much that other sectors aren’t gaining ground.