Berkshire's Likely Top Stock Picker: Who He Is and How He Got There — Barrons.com

By Evie Liu

Food and beverage companies head into 2026 under unusual pressure, squeezed by policymakers, consumers, supply challenges, and fast-changing cultural expectations about what Americans should eat and drink.

After a bruising 2025, many companies have recast their portfolios, cut costs, or made bold acquisitions in hopes of regaining momentum. The coming year will show whether those efforts are enough — or whether the industry's headwinds have become structural.

Food companies were under significant cost pressures in 2025. Commodity prices stayed stubbornly high as supplies of beef, cocoa, coffee, and dairy proteins remained tight. Tariffs added further pressure, leaving companies to choose between raising prices and testing consumer patience or absorbing margin hits.

Demand wasn't much healthier. Immigration uncertainty weighed on Hispanic consumers — historically among the most reliable spenders across food and beverage — while November's government shutdown disrupted food-stamp payments and squeezed lower-income households.

"2025 has been one of the toughest we can remember in our 25 years covering the consumer staples sector," wrote RBC Capital Markets analyst Nik Modi in a recent note.

Some pressures may ease next year. The Trump administration has already reversed tariffs on some agricultural products and signaled an interest in moderating beef prices. The World Bank expects agricultural commodity prices to remain stable to slightly lower in 2026, though weather shocks and crop diseases could still trigger volatility.

Other headwinds look far more durable. The rapid adoption of GLP-1 weight-loss drugs like Wegovy is encouraging Americans to eat less, a demand shock hurting volume growth from snacks and meals to sodas and beer. As new oral versions of the drug become available and prices come down, usage is expected to continue rising.

At the same time, regulators are intensifying scrutiny under the Make America Healthy Again initiative. The initial push to remove synthetic colors may soon extend to added sugar, sodium, preservatives, and front-of-pack nutrition labels — changes that could raise reformulation costs and erode already-thin margins.

Accustomed to pricing power during the inflation surge, food companies now face consumers who are both more price-sensitive and more skeptical of ultraprocessed foods. Policy changes surrounding immigration and SNAP benefits will also continue pressuring the spending power of millions of Americans. The toll is showing up in earnings and stock performance.

Companies focused on pantry staples, where private labels have been taking share, were hurt the most with sluggish or even declining sales. Conagra Brands, Lamb Weston Holdings, and Campbell's stocks led the pack, losing 38%, 34%, and 32%, respectively. Seasoning and snack companies are holding up better: McCormick shares are down 10%, Mondelez International lost 9%, while chocolate giant Hershey scored a 12% gain as cocoa prices started to ease.

Beverage makers are facing similar headwinds: Coca-Cola posted only 1% volume growth in the latest quarter, while PepsiCo's North America beverage volume shrunk 3% from a year ago. PepsiCo shares had tumbled 15% by mid 2025, but bounced back as investors regained hope over the involvement of activist investor Elliott Investment Management.

Alcohol consumption remains depressed as well — stocks of Constellation Brands, Diageo, Boston Beer, Molson Coors, and Brown-Forman all saw steep declines this year, led by Constellation's 39% loss.

"We are struggling to find any drivers that would suggest middle- and lower-income pressures will improve," said Modi. "In fact, we would argue things could get worse before they get better given changes to SNAP benefits, some wobbling in the labor market and general anxiety over AI and its impact on job security."

Still, consumers aren't abandoning packaged foods — they're simply demanding different ones. Shoppers increasingly prefer shorter ingredient lists, recognizable components, and products that convey wellness through high protein, high fiber, or gut-health ingredients. That shift has forced strategic pivots.

Companies are pruning underperforming legacy brands and doubling down on faster-growing categories. Kraft Heinz plans to unwind its past merger and split into two businesses, while Keurig Dr Pepper is separating its coffee unit — along with an acquisition of JDE Peet's — from other soft drinks. Others are buying growth outright: PepsiCo purchased prebiotic soda maker Poppi, and Celsius Holdings acquired Alani Nu, expanding its share of the energy-drink market.

Investors continue to reward companies that can diversify their portfolios and find growth pockets even in a market of shrinking calories and shifting tastes. Much of that is happening in the beverage market.

Energy drinks have been a notable standout. Shares in Monster Beverage has increased 45% in 2025, thanks to its innovative products and international expansion. Celsius stock gained 63% as its Alani Nu acquisition and deepened partnership with distributor PepsiCo boosted revenue significantly. Vita Coco, a leader in coconut water, is also drawing interest as demand for low-sugar, natural hydration rises. The stock, which is a Barron's pick, is up 45% this year.

Legacy names could shine as well. Shares in Anheuser-Busch climbed 29% despite weak beer volumes, lifted by strength in its premium brands, expansion into nonalcoholic offerings, and shareholder-friendly capital returns. Coca-Cola increased 13% as the company showed strong pricing power even as inflation cools. The beverage giant also benefits from its global footprint, strong balance sheet, and new growth engines in brands like Fairlife milk.

For food and beverage stocks, performance next year will depend on whether companies can spark real demand through innovation, reformulation, and successful marketing. Modi expects 2026 to be another tough year, but believes that companies that lay out the most realistic targets will be the best performing stocks.

"We believe the companies that create value over the next 1, 3 and 5 years will be those that have the courage to make decisive decisions that others are not willing to make," he said.

Write to Evie Liu at evie.liu@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

By Lewis Braham

It's hard to imagine a manager with a better long-term record than Will Danoff.

In an index fund world, the celebrity solo fund manager is a dying breed, like a lone gunslinger on the stock market's last frontier. After a storied 35-year career at the helm of Fidelity Contrafund, Danoff is such a star, emblematic of forebears such as Magellan's Peter Lynch.

Just consider his most recent triumph: The $176 billion fund was an early investor in SpaceX's privately traded shares in 2015 and stands to notch huge gains with an IPO in the works. Contrafund has the most exposure of any Fidelity fund — at about $3 billion.

Yet last April, the 65-year-old manager took on two new co-managers — Jason Weiner, 56, and Asher Anolic, 47 — who are now running 20% of the portfolio. The fund's strategy is still to find dominant growth companies. Nor is Danoff retiring.

From Sept. 17, 1990, when he first became manager, through Dec. 19, 2025, Contrafund delivered a 10,423% cumulative return, more than double the Vanguard 500 Index fund's 4,070%, according to Morningstar. Contrafund under Danoff has returned an average 14.1% a year versus the S&P 500 index's 10.3% through Sept. 30, according to Fidelity. Contrafund's 15.6% five-year annualized return beats the Morningstar large growth fund category's average of 11.1% by a wide margin.

Danoff now manages some $369 billion, including assets in other accounts run in a similar style. "I have done well at Contrafund because I've worked closely with virtually every analyst and every fund manager," he says. "It's made me smarter and enabled me to take the fund from $300 million to [over] $300 billion."

The looming question for investors: Can the fund's sterling record continue as he gradually rides off into the sunset?

The Barbell Strategy

Danoff acknowledges that there are challenges to being the only one at the top, especially as his fund has long benefited from the largest, most popular tech stocks like Meta Platforms and Nvidia, when the market could shift soon to other fare.

Contrafund has an unusual barbell-shaped portfolio with a few massive positions on the top and hundreds of tiny ones on the bottom. Facebook parent Meta makes up 13.1% of the portfolio; Nvidia, 10.3%; Amazon.com, 6.4%; and Berkshire Hathaway, 5.7%, yet the fund holds 374 stocks.

Danoff has long held dominant large growth companies, riding them to significant gains. One of his strengths is getting in early and holding for a long time. He has held Meta since 2011 before it went public as Facebook in 2012, for example. From March to May of 2011, the fund acquired 3.5 million shares of Facebook's private stock worth $87 million. But he has allowed the position to grow much larger over time, something that many other managers would be unwilling to do.

Contrafund's top holdings at the time were Apple, Google (now Alphabet), Berkshire Hathaway, McDonald's, and Coca-Cola.

But as Danoff's confidence in Facebook's prospects grew, he added to his position and let it ride. Apple had been a previous big winner in the 2000s, as had Texas Instruments and Cisco Systems in the 1990s. By this Sept. 30, the fund held over 36 million Meta shares worth $26.7 billion.

The concentration at the top is a newer phenomenon as the fund's assets have grown. Ten years ago, in 2015, the largest holding was Facebook, but it represented only 4.9% of the fund. Twenty years ago, in 2005, the largest holding, Google, was 3.5%, and 30 years ago, in 1995, it was Chrysler, 1.6%.

To find new growth companies is one of Danoff's goals — and part of the impetus behind bringing in co-managers. Early this year, he approached Weiner and Anolic and said, "I think there's a big opportunity in the mid- and small-cap stocks, outside of the Magnificent Seven, and with the dollar potentially weakening, there could be some big opportunities overseas." He's especially interested in the many initial public offerings from 2021.

The team generally declines to discuss its small stock positions — which could pose the risk of being copycatted by competitors. But examining the holdings on Morningstar.com, one can find several positions of the 2021 IPO crop: online videogame company Roblox, first purchased in September 2024; language learning app company Duolingo, September 2023; and cryptocurrency exchange Coinbase, January 2025.

Given Danoff's interest in foreign exposure, there are also overseas IPOs of 2021 such as Brazilian financial-technology company Nu Holdings, purchased December 2021; Netherlands music giant Universal Music Group, September 2021; and Korean e-commerce company Coupang, March 2021.

Not long after Weiner and Anolic joined in April, the team started buying shares of restaurant technology company Toast, which went public in September 2021. "The core of what they do is serving restaurant managers to make their operations more efficient," Weiner says. "Toast's software serves all their needs."

Currently, each of these 2021 vintage IPOs represents less than 0.4% of the portfolio. Contrafund is a "scrutinized fund, maybe one of the top 10 most famous mutual funds in the world," says Falcon Wealth Planning advisor Gabriel Shahin, who invests in the fund in his clients' retirement accounts and admires Contrafund for differentiating itself from index funds with such IPOs.

One new position since Weiner and Anolic joined isn't a price-sensitive IPO, but lab equipment manufacturing giant Thermo Fisher Scientific. "Jason and I love not having to speculate on who the winner might be in a high-growth industry with a lot of unknowns," Anolic says. "We often try to find companies that sell the 'picks and shovels' to a capital intensive customer base." He calls Thermo Fisher a "one-stop shop, supplying the essential equipment as well as services that allow academic institutions and drug companies to conduct clinical trials and manufacture important therapies." By supplying only the tools to do such research and development, Thermo doesn't face the risk of drug trial failures.

Defending Meta

The fund's huge holdings, like Meta, are illustrative of a key strategy that has served Danoff well. He favors "owner operators" — founder-run businesses or ones with high insider ownerships, because the CEO who founded the business or owns a lot of its shares cares more about its prospects.

Meta's Mark Zuckerberg is an owner-operator, as are Jensen Huang at Nvidia and Warren Buffett at Berkshire. "Often a large insider ownership position suggests that management is totally aligned with the outside shareholders," Danoff says. He wants smart capital allocators who don't make foolish acquisitions at the peak of an economic cycle when stocks are expensive, but save their cash for a downturn to buy weaker competitors. Owner-operators tend to be more cautious because their own money and legacy are on the line.

"Often the founder is thinking differently — how to make the right decisions for the long term for the company," he says.

In Meta's case, Danoff points out that even though its stock has gone up fivefold in the past 10 years, its earnings have gone up eightfold, so the stock is actually cheaper valuation-wise than it was in 2015. Danoff believes that Meta's shares will catch up with that earnings growth.

His confidence in Zuckerberg remains high in the midst of an artificial-intelligence race. Zuckerberg has "three billion monthly [active users] at Facebook and three billion monthly at Instagram," Danoff says. "That's like half the world. So, he has this massive canvas to work with, and with the use of AI [for targeted advertising], user engagement has actually improved. The AI figures out what you like — if it's, say, basketball or soccer — so it's serving you better ads at the right time. Because of that, the price per ad is being bid up."

Yet the AI race is costly. "Right now, everybody's worried because [Zuckerberg] and his team have decided to invest more aggressively in AI, and that has increased his capital spending," Danoff says. "So, for the next couple of quarters, perhaps Meta's growth is going to slow. But based on what he has done in the last decade, I feel comfortable that he's going to do well."

Growing Pains

On going it alone, he now says, "If you take a step back, you might say, '$300 billion and one guy? That's ridiculous.' "

Others would agree. "The star manager — that era seemingly is in the rearview mirror," says Robby Greengold, who covers Contrafund as a principal at Morningstar. "Maybe that's because passive index funds have done exceptionally well. But there's also a push for multimanager portfolios. There are some gatekeepers and consultants who prefer that because they're worried about key-person risk." After all, a celebrity manager could suddenly jump ship, retire, or become ill.

Are Weiner and Anolic up for the task? Greengold thinks so. "This is a very well-executed handoff," he says. "Jason Weiner and Asher Anolic come to the fund with demonstrable success of investing collaboratively elsewhere." Weiner managed Fidelity Growth Discovery, another large growth fund, from Feb. 1, 2007, until Sept. 30, 2025. According to Morningstar, from Feb. 1, 2007, through Sept. 30, 2025, that fund beat Contrafund, the two delivering respective cumulative returns of 870% and 831%. (Anolic joined Growth Discovery as Weiner's co-manager on July 1, 2017.) Both funds also beat the S&P 500's 560%. Weiner joined Fidelity as an analyst in 1991, Anolic in 2008, and they have managed other funds independently.

They also get along with Danoff, which is important — as money managers can have big egos and often dislike sharing the spotlight. "I've worked very closely with Jason for, like, 35 years," Danoff says, who adds that he "always poo-pooed" the teamwork idea "because I believe in individual accountability." But recently, he notes, Anolic was in Washington, D.C., meeting with some healthcare companies, while he went to New York to see semiconductor company Advanced Micro Devices. And Weiner was in Boston with various visiting company executives and analysts at Fidelity headquarters. "So, it's much more additive than I realized," he says.

Yet additive to Contrafund means subtractive to the other Fidelity funds that Weiner and Anolic have worked on. It also has led to managerial shifts at Danoff's other funds, such as Fidelity Advisor New Insights. For this reason, Greengold recently called the shift a "pivotal and a perilous moment."

"The risk is not that we're going from a single manager to several," he adds. "It's that Fidelity has hundreds of billions of dollars tied to the success of really two individuals at the firm, and that's Danoff and Steve Wymer," who runs Fidelity Growth Co. "More than half a trillion dollars combined, and both of them have huge bets on their favorite stocks, Meta for Danoff and Nvidia for Wymer. So, you have a lot of portfolio concentration.

"And there's a general risk of managers who are getting to the latter portion of their careers, and it's tough to know whether they are going to be as talented in that last portion."

Succession Plans

But what happens when the celebrity executive leaves? While Zuckerberg and Nvidia's Huang are still young, Warren Buffett, at age 95, is stepping aside as Berkshire's CEO at year end. The best founders plan carefully when they select their successors, and Danoff says he is "very impressed with [Berkshire's] Greg Abel."

The Berkshire position and Contrafund's other financial-services stocks have acted as diversifiers and ballast for the fund during growth stock downturns, Greengold notes, helping it to hold up better in bear markets. It has a 16.6% financial-services weighting versus the average large growth fund's 8.2%.

Danoff also realizes that at a certain size, companies are bigger than their famous CEOs. He regrets having maintained such a low weighting in Apple — currently 2.5% — after co-founder Steve Jobs died. "I made a big mistake," he says. "When Steve Jobs passed, I thought, 'Oh, the great founder is no longer running the company. Apple is going to be much weaker,' and I significantly underestimated the consumer love for Apple products that locks them into the Apple ecosystem."

Will Danoff have a similar recognition with Contrafund? "I want to channel my inner Warren Buffett," he says. "I'm going to live to 95, manage the fund until I'm 95. How about that?"

Yes, stepping away from the limelight can be hard.

Write to editors@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

By David Wainer

As the AI trade wobbles, some investors are again searching for shelter.

Consumer packaged goods — from food to cleaning products — have been mostly overlooked thus far despite typically serving as a refuge during periods of market stress. After several years of underperformance, the sector offers pockets of value, whether in diapers, soda, candy or beer. Finding safety, however, requires selectivity, as structural shifts in how we eat and drink collide with parts of the consumer-staples universe.

History helps explain why investors instinctively reach for staples in times of stress. In each of several major market downturns in recent decades — periods when the S&P 500 fell 20% or more — the sector generally outperformed.

During the dot-com bust of 2000, the financial crisis of 2008 and even the inflation-driven selloff of 2022, companies selling everyday necessities outperformed the broader market. Investors seek the relative safety of their predictable cash flows.

Take the most recent major selloff in 2022. From the market's January peak to its October trough, the S&P 500 fell roughly 25%. Over that same period, General Mills, Campbell's, Hershey and J.M. Smucker all advanced. A similar pattern played out during more-recent declines following President Trump's "Liberation Day" tariff announcement, reinforcing the idea that Big Food can still act as a hedge when growth stocks unravel.

But those spurts of outperformance have been short-lived, partly because of structural forces affecting these companies. Over the past three years, those food makers are all down even as the S&P 500 has advanced 79%. Healthier eating, the rise of weight-loss drugs and intensifying competition from store brands mean investors have to weigh the relative safety of these food companies against growing pressures to their business that might intensify next year.

In 2026, weight-loss drugs are expected to be adopted more widely, aided by new oral formulations and wider insurance coverage. That could continue to pressure demand for high-calorie, heavily processed foods.

At the same time, consumers still recovering from years of food inflation are increasingly trading down to store brands, benefiting retailers such as Walmart and Costco at the expense of branded manufacturers. These trends have put pressure on Big Food volumes, forcing many to offer promotions to win back market share. For instance, General Mills last week reported a rebound in volume of its North America retail business, but only because it is cutting prices.

Investors looking to rotate into the safety of staples might want to be more tactical. McCormick stands out as a company better aligned with evolving consumer behavior.

While the stock is pricier than the average food company, at around 21 times forward earnings, it is significantly below its five-year average of about 27. The company benefits from two durable secular shifts: more at-home cooking, and a growing preference for fresher, healthier meals, says Robert Moskow, an analyst at TD Cowen. Spices account for a tiny share of a household's food budget, making McCormick's volumes more resilient than those of traditional packaged-food companies.

Moskow also notes that younger consumers are cooking more — a shift McCormick has captured through targeted marketing and disciplined pricing that makes it harder for private labels to compete.

Another way to gain food exposure without running headlong into U.S. consumer pressures is geographic diversification. Mondelez and Nestlé generate much of their revenue outside the U.S., making them less exposed to domestic economic stress. As an added benefit, easing cocoa-cost pressures could help margins in their chocolate businesses. Beverage giant Coca-Cola, with its global footprint and growing focus on zero-sugar drinks and energy beverages, also fits the mold of a steady performer.

Yet another approach is to bet on companies selling household and personal-care essentials that are insulated from shifting health trends.

While they are facing pressure from store-brand competition, companies such as Procter & Gamble and Kimberly-Clark — whose portfolios span detergent, diapers and tissues — have no direct exposure to food-consumption trends.

P&G is the steadier but more expensive option, while Kimberly-Clark offers a cheaper entry point after its Kenvue deal rattled investors worried about deal risk and potential legal overhangs tied to consumer-health brands like Tylenol. It is trading at a forward multiple of 13.1 relative to a five-year average of nearly 19.

Consumer staples can still offer shelter in a turbulent market. The challenge now is telling durable value apart from value traps.

Write to David Wainer at david.wainer@wsj.com

By Andy Serwer

The year end affords us an opportunity to step back and assess the past and wonder about the days ahead. As a somewhat arbitrary demarcation, ringing in a new year sometimes lacks drama — though not this year. Heading into 2026, we will be witnessing a changing of the guard at what are arguably America's three most important companies. (Not you, OpenAI.) I'm referring to leadership changes at Walmart, Berkshire Hathaway, and Apple.

The moves at these companies aren't symmetric. Each is embarking on a distinct changeover path, but the common denominator of resetting is unmistakable and momentous. On Feb. 1, Doug McMillon, CEO of Walmart since Feb. 1, 2014, will be handing the reins to John Furner, president and CEO of Walmart U.S. (They have succession down to the day at Walmart!) Meanwhile, Warren Buffett, who has been running Berkshire Hathaway forever (actually only since 1965 — slightly shorter than forever) will be turning over his responsibilities to Greg Abel, currently vice chairman of noninsurance operations, on New Year's Day.

As for Apple's Tim Cook, who has been CEO since Aug. 24, 2011, he isn't going anywhere — yet. But with the announced departure of some key Cook deputies — Chief Operating Officer Jeff Williams, general counsel Kate Adams, and head of government affairs Lisa Jackson, part of a continuum in a multiyear switching out of 60-plus-year-old top executives, or as an insider calls it, "maintaining the magic" — the 14 1/2 -year Cook era at Apple looks to be winding down.

Quibble with me if you like, but I'd argue that under the leadership of McMillon, Buffett, and Cook, these three companies have redefined how to do chicken right. They are models of efficiency, supply chain, profitability, and talent nurturing. All three have outperformed the market during their CEO tenures.

There are a few connections among them, especially Berkshire's home-run investment in Apple, probably Buffett's best stock investment ever in dollar terms, generating some $100 billion in pretax profits and with tens of billions more still held in a roughly $35 billion investment. This is the case, even though one could argue that Berkshire sold much of its Apple stock too soon, missing a strong recent run-up.

Speaking of missing an opportunity, Buffett once owned Walmart but sold his stake beginning in 2015, in the early days of McMillon's tenure. This is ironic since Buffett has chastised himself for missing Walmart early on. Make that later on, too, Warren. Even Oracles can't be perfect, as Buffett so often tells us.

As for Walmart and Apple, yes, the former sells Apple products, but that distribution channel is small potatoes compared with Apple's own digital and physical stores and mobile carriers. Also note that Walmart is one of few national retailers that doesn't accept Apple Pay; it wants its customers to use Walmart Pay.

Now let's take a look at some numbers. Simply put, these three CEOs have been wealth-creation beasts. And it isn't just Buffett, who's actually not No. 1 by a long shot. That honor goes to Tim Cook, who, when he became CEO, presided over a company with a mere $350 billion in market capitalization. Today, it's $4.1 trillion — or some $3.75 trillion more. Yes, you can argue that much of this was selling products that Steve Jobs developed, but talk about taking an operation to a whole other level. As for Buffett, Berkshire is worth some $1.1 trillion today, which is, of course, all Warren. Now consider Walmart. When McMillion became CEO, Walmart's market cap was $242 billion, compared with $920 billion today, or almost 3.8 times bigger. In total, the three CEOs have generated some $5.5 trillion of value.

As for the prognosis for these companies, note that at each of these well-oiled machines, succession is considered mission critical. Walmart is so good at this that Wall Street just assumes Furner will succeed — though you never really know. As for Buffett, there is some anxiety, as to be expected, over how able Abel will be. Again, who knows, but remember, this is really Buffett's biggest call ever.

Picking a new CEO is "the most important decision that you make," Buffett said to me five years ago. "It isn't what their IQ is. And it isn't even necessarily the top [person] in a given type of managerial skill, if they're the kind that will leave you tomorrow. You really want somebody that is devoted to Berkshire."

For Cook, who turned 65 on Nov. 1, there's still time. The betting for now is that John Ternus, 50, senior vice president of hardware engineering, will ultimately lead Apple. "We believe Cook is a hall-of-fame CEO, and he will be CEO for at least the next two years," says the ever-colorfully attired Dan Ives of Wedbush Securities. Ives says that Cook will want to see through implementation of Apple's artificial-intelligence strategy.

It's also worth noting that Ternus, Abel, and Furner have been at their companies 25, 27, and 33 years, respectively. Talk about vetting.

Should you sell your Apple, Walmart, or Berkshire stock? Recall that some suggested as much when Tim Cook took over at Apple. Had you done that with, say, a $100,000 stake and invested it in the S&P 500 index instead, you would be looking at $1.4 million-plus opportunity loss. (Your Apple stock would be worth $2,040,270 today; your S&P 500 investment only $578,850.)

To paraphrase Coach Nick Saban: When it comes to these three American icons, it probably pays to trust the process.

Write to Andy Serwer at andy.serwer@barrons.com. Follow him on X and subscribe to his At Barron's podcast.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.