Warren Buffett’s Boldest Trades of 2024: The $550M Bet on This Stock

Key Takeaways:

• Massive Sell-Off: Buffett offloaded $133 billion in stocks this year, including major stakes in Apple and Bank of America.
• Strategic Investments: Amid these sales, Buffett made a notable $550M investment in Domino’s Pizza, signaling selective focus on high-growth opportunities.
• Investor Opportunities: While Berkshire faces constraints, mid- and small-cap stocks offer individual investors attractive growth potential with lower valuations.

Buffett’s Big Moves in 2024

Warren Buffett has made headlines this year with some major stock sales. So far in 2024, his company, Berkshire Hathaway, has sold $133 billion worth of stocks in just nine months.

Some of the biggest sales this year include selling over two-thirds of his stake in Apple (NASDAQ: AAPL) and reducing his position in Bank of America (NYSE: BAC). 

Many view Buffett’s large sell-offs as a warning that the stock market may be overpriced, signaling a need for investors to reconsider their exposure to equities. By selling Apple and Bank of America, Buffett likely believes these stocks are trading near or above their true value, making it harder to earn good returns. For investors, trimming positions in similar stocks might be a wise move.

However, Buffett doesn’t think every stock is overvalued. His challenge lies in managing $600 billion in assets, including Berkshire’s cash and Treasury holdings. His selective stock purchases this year reveal his focus on finding true value in the current market.

Buffett's $550M Domino's Bet

While reducing exposure to larger names, Buffett made a standout $550 million investment in Domino’s Pizza (NYSE: DPZ). This may seem small by Berkshire standards, but it represents 3.7% of Domino’s market cap—a strong vote of confidence.

Domino’s stands out for its:

• Profitable Growth Strategy: Opening new stores, even near existing ones, to dominate local markets.
• Strong Operating Margins: Consistent margin expansion despite competitive pressures.
• Shareholder Returns: A track record of returning capital to investors.

Why Smaller Stocks Are the Real Opportunity

Buffett’s challenge lies in Berkshire’s size. Investing in smaller companies like Sirius XM ($9B), Pool Corp ($14B), and Heico ($32B) without moving the market is difficult. Larger firms, where Buffett can deploy billions, often don’t meet his value criteria.

For individual investors, however, these constraints don’t apply. With mid- and small-cap stocks trading at forward P/Es of just 17.1—compared to the S&P 500’s 22.1—there are plenty of opportunities to find value.

Should you invest $1,000 in Domino's Pizza right now?

Buffett’s investment in Domino’s highlights a key insight: smaller companies may offer better opportunities. While Domino's is part of the large-cap S&P 500, mid- and small-cap stocks, with forward P/Es of 17.1, trade at more attractive valuations than larger companies.

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