Monday, November 10, 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
  • Johnson & Johnson (JNJ) — $61.35
  • 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
  • Procter & Gamble (PG) — $61.14
  • 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.

While the prices above are what he paid, according to his letters to shareholders, he also just recently bought more BNI at $79.65 per share.

1 comment:

  1. Not a bad strategy, although it would scare me just a little that the stocks are selling for less than Buffett paid for them. However, if he's still holding them they must be good investments and who am I to question his stocks. I don't try to keep up with Buffett's picks, because I'm not that involved in the market just yet. Mentor Capital (MNTR) is the only stock I am looking into at the moment, but that could change later.