Warren Buffett may be the Oracle of Omaha, but his track record isn’t perfect. Just look to his losing airline play that saw Buffett dump a slew of airline stocks, including Delta (NYSE:DAL) and American (NASDAQ:AAL), at or near their initial pandemic bottom in May 2020 — companies which, like Delta, nearly doubled in the interim.
Likewise, many consider Buffett’s age a concern as Berkshire Hathaway’s (NYSE:BRK-A, NYSE:BRK-B) future remains uncertain. While always a concern, investors’ fears magnified after Warren Buffett’s longtime business partner, Charlie Munger, passed. Worse yet, though possibly a respectful and heartfelt eulogy, Buffett told investors in the subsequent annual shareholder letter that Munger “was the ‘architect’ of the present Berkshire, and [Buffett] acted as the ‘general contractor’ to carry out the day-by-day construction of his vision.”
The extent to which that’s true is uncertain. Still, just as many investors follow Buffett’s lead based on a cult of personality as do for his sound investment principles — if Munger was the true brains behind the operation, then maybe it’s best to avoid these Warren Buffett stocks today.
Paramount (PARA)
I said Paramount (NASDAQ:PARA) was worth selling in August 2023 when shares traded in the $15 range; little has changed since then aside from per-share pricing dropping further. They’ve worsened as corporate politicking and legal battles put further pressure on the struggling media stock.
Bloomberg’s Matt Levine wrote a stellar summary of the current Paramount conundrum that’s well worth reading but, in a nutshell, a unique voting structure means that one side of the shareholder equation (voting rights vs. non-voting shares) will be left in the lurch no matter which buyout deal transpires, leaving a protracted legal battle all but inevitable.
Perhaps that’s why (former) CEO Bob Bakish just stepped down — the stress of managing multiple threads pulling apart the overall operation, including flagging cable viewership alongside merger battles, is likely quite the load to bear. Regardless, when CEOs suddenly depart a struggling enterprise, it’s one more data point to note that this is one major Warren Buffett stock to avoid.
Sirius XM (SIRI)
Sirius XM (NASDAQ:SIRI) may not be struggling quite as much as Paramount, but that doesn’t change the fact that it’s another Warren Buffett stock to avoid. The company lost nearly 360,000 paying subscribers in the first three months of this year alone, beating the prior period’s loss by nearly 20,000. Sirius management blamed the slippage on fewer promotional subscribers converting (think Sirius bundled in new and used car sales) or otherwise having access to the platform. I say that if your entire business model hinges on hitchhiking onto other, mostly unrelated business segments and their unique sales cycles (that you can’t affect), then maybe it’s a sign that a pivot is in order.
Sirius shares are firmly in penny stock territory, trading below $3.50, meaning there may be an opportunity for a quick bounce, considering its just-released report includes slim sales and income gains. Still, I wouldn’t peg Warren Buffett as a penny stock player, nor would I hinge my hopes on a long-term reversal, making this another Warren Buffett stock to avoid.
Kraft Heinz (KHC)
Warren Buffett lamented in 2019 that he had overpaid for his stake in Kraft Heinz (NASDAQ:KHC). Unfortunately, it hasn’t improved much in the interim and remains another Warren Buffett stock to avoid.
Despite trading close to its 2019 price levels, Kraft Heinz is in a materially worse position than before, considering ongoing supply chain issues and economic forces eating into household budgets for name-brand foods like most of Kraft’s offerings. The company’s first-quarter earnings drops this week, on May 1st, but don’t expect many surprises to the upside.
The company’s fourth-quarter report included slipping sales (down 7% year-over-year), mostly centered in North America, where overall revenue fell by nearly 10%. We’re arguably at the tail end of rate cuts’ worst impacts, yet Kraft is still struggling and may not emerge from the other side of a soft landing intact if and when that wider economic recovery occurs.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.