We recently compiled a list of the 10 best performing Warren Buffett stocks in 2024.In this article, we are going to take a look at where Liberty Latin America Ltd. (NASDAQ:LILA) stands against the other Top-Performing Warren Buffett Stock of 2024.
Warren Buffett has etched his name as the most successful investor on Wall Street by steering a small company into a trillion-dollar empire. The milestone stems from the billionaire investor’s value investing strategy that has always focused on undervalued stocks with tremendous upside potential.
In a year where the overall market has been on an upward trajectory thanks to solid financial results amid a resilient economy and expectations of interest rate cuts, Buffett has outperformed the overall market. His investment firm gaining more than 28% compared to a 17% gain for the S&P 500 over the same period underscores Buffett’s competitive edge in picking and investing in market-beating stocks.
Buffett, who rose to prominence in the 1960s, has transformed his investment firm into a conglomerate with stakes in companies in the insurance, railroad, retail, manufacturing, and energy sectors. According to Andrew Kligerman, TD Cowen’s Berkshire analyst, Buffett’s performance in 2024 is a testament to his stock-picking skills focused on businesses trading at relatively lower valuations.
Nevertheless, the billionaire investor has been in defensive mode despite the stellar performance for the better part of 2024. Concerned by valuations getting out of hand amid the high interest rate environment and deteriorating economic conditions, Buffett has dumped massive amounts of stocks in companies whose valuations got out of hand.
With the massive sale of stakes, the billionaire has successfully generated significant value as most of the stocks had gained significantly amid the bull run in the market. The stock sale has also allowed the billionaire investor to raise the cash pile in his investment firm to a record $277 billion.
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Although Buffett has previously argued against diversification, it’s understandable why his firm decided to reduce stakes in some of the companies. The investments had been a huge success for his firm, locking profits with the overall market at all-time highs.
The fact that Buffett invests through a conglomerate structure, often considered archaic, underscores his edge in the highly competitive investment world. At 94, the ‘Oracle of Omaha’ has started showing signs of slowing down. The appointment of Greg Abel as his successor signals he may not have a significant say in investment decisions in the near future.
What might come as a surprise is that the best-performing Warren Buffett stocks in 2024 are not among the big names that account for the biggest share of Buffett’s portfolio. Instead, they are companies that have remained resilient amid the high interest rate environment that has rattled the stock market.
Additionally, they boast of stocks well positioned to benefit as the macroeconomic environment improves, with the US Federal Reserve cutting interest rates by 50 basis points. The US economy is avoiding recession as the Fed continues to tweak its monetary policy, which should allow the companies to generate more shareholder value and, therefore, continue powering high.
Buffett’s investment portfolio also includes companies with tremendous potential and ability to generate free cash flow owing to resilient core businesses. Consequently, the companies have emerged as a source of passive income, allowing Buffett to generate billions of dollars in dividends. Last year alone, the Oracle of Omaha raked $4.36 billion in dividends from his investments.
Our Methodology
We analyzed Berkshire Hathaway’s Q2 2024 portfolio and picked the best-performing stocks on a year-to-date basis, as of September 20. The list is sorted in ascending order of the year-to-date performance of the stocks.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Liberty Latin America Ltd. (NASDAQ:LILA) is a communications services company that provides fixed, mobile, and subsea telecommunications services. It emerged as one of the best-performing Warren Buffet stocks in 2024, with a 32.28% gain.
The rally has come on the company’s core business growing at an impressive rate, delivering solid financial results. While revenue in the second quarter remained unchanged at $1.11 million, the company recorded an adjusted OIBDA for the second quarter of $389.1 million.
Liberty Latin America Ltd. (NASDAQ:LILA) experienced notable growth in its customer base, securing an additional 62,000 new clients over the first half of the year, excluding Puerto Rico. Despite facing challenges in Puerto Rico, the company is poised to continue its upward momentum through strategic acquisitions with millions and investments in fiber and 5G technologies.
Liberty Latin America Ltd. (NASDAQ:LILA) has also announced its intention to repurchase shares and anticipates a profit increase across its operations in the next year. The company has been involved in major acquisitions and mergers, including Tigor in Costa Rica and DISH in Puerto Rico. These strategies are crucial for Liberty Latin America’s goal of enhancing landline and mobile services and returning to financial health.
It remains one of the top stock picks in Buffett’s portfolio owing to its record in returning value to shareholders. In the year’s first half, it returned $300 million through buybacks.
By the close of Q2 this year, 23 out of the 912 hedge funds tracked by Insider Monkey had invested in Liberty Latin America Ltd. (NASDAQ:LILA). The largest stake, valued at $44.60 million, was held by Mark G. Schoeppner’s Quaker Capital Investments.
Here is what Bonhoeffer Capital Management said about Liberty Latin America Ltd. (NASDAQ:LILA) in its Q3 2023 investor letter:
“Contrast that to Liberty Latin America Ltd. (NASDAQ:LILA), which for much of the past 7.25 years (since the spin-off) has had an undervalued (four or five star) rating. The value growth (-11%/year growth over the past 7.25 years) has driven this stock’s return (-14%/year over the past 7.25 years), as the market increasingly discounted this stock for negative growth-a classic value trap. The future value of Liberty Latin America is driven by the ability to increase its intrinsic value over time with the changes in valuation playing a secondary role.”
Overall LILA ranks 8th on our list of 10 best performing Warren Buffett stocks in 2024. While we acknowledge the potential of LILA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LILA, check out our report about the cheapest AI stock.
