Thursday, October 23, 2008

Buffett stocks on sale

Warren Buffett is widely regarded as the world's greatest investor. His basic strategy is to buy great companies at low prices, and then hold them forever. Many investors try to emulate Buffett's investing method when making their own stock picks, but few can match Buffett's success.

However, one investing strategy available to ordinary investors is buying stocks that Buffett actually owns, when they fall below his original purchase price. Luckily, he lists his major holdings in Berkshire Hathaway's annual letter to shareholders. With a little basic math, you can figure out how much he paid for the stocks he bought.

Today, with the recent stock market sell-off, many of Buffett's holdings are selling for less than what he paid for them. This gives you the opportunity to buy them on sale. I have calculated the purchase price for his major holdings. Here are the ones that are currently on sale.

Stocks currently selling below Buffett's purchase price, and the price Buffett paid:
  • ConocoPhillips (COP) — $59.34
  • Kraft Foods (KFT) — $33.38
  • Procter & Gamble (PG) — $61.14
  • Sanofi Aventis (SNY) — $43.21
  • US Bancorp (USB) — $32.80
  • USG Corporation (USG) — $31.40
  • Wells Fargo (WFC) — $34.96
Stocks currently selling slightly above Buffett's purchase price, and the price Buffett paid:
  • Burlington Northern Santa Fe (BNI) — $77.78
  • Johnson & Johnson (JNJ) — $61.35
  • Wal-Mart Stores (WMT) — $47.23
Although this second group is slightly above his purchase price, a single down day in the stock market could push some of them below his purchase price.

Honestly, I don't know what he's doing owning USG. It's a no-growth company, paying no dividends, tied to the housing market. The others, however, would likely serve you well.

Update 10/30/2008: Berkshire has bought more BNI at $79.65 per share.


  1. Buffett bought preferred GE shares recently. I think he bought at $22 a share.

    Last I check GE is selling around $18.

    I don't want to see Buffett hurt. I want to see Soros decimated because he doesn't believe in America as much as Buffett does.

  2. His preferred stock gives him an annual return of 10% on his purchase price. As long as he never sells, a fall in the value of his preferred shares shouldn't bother him at all.

    He has warrants for common shares that he can exercise for $22. So he doesn't lose if GE's stock falls, he just fails to gain.

    Basically, he got a great deal that is unavailable to anyone else.

  3. Giants do stumble from time to time.

  4. It's interesting that he doesn't own Coke.

  5. Brandon said...
    It's interesting that he doesn't own Coke.

    He doesn't own the entire company, but he has a considerable stake in Coca-Cola. He just bought it so long ago that you can't buy below his asking price.

    Anonymous said...
    Giants do stumble from time to time.

    I wouldn't call it a stumble for Warren Buffett. The entire S&P 500 has fallen back to 1997 levels. Anybody who bought stocks in the past ten years is sitting on some losses.

  6. Just buy BRK/A (or BRK/B) and you've got 'em all at current value. Plus the benefit of the non-publicly traded businesses which are generating steady cash flow.