Jul 232015

Kiplinger’s has published an article, “6 Best Buffett Stocks To Buy Now” (July 23, 2015).  The six Berkshire Hathaway (BRK.A, BRK.B) stocks that are recommended are (1) Wells Fargo (WFC), (2) Kraft Heinz (KHC), (3) International Business Machines (IBM), (4) American Express (AXP), (5) Visa (V), and (6) Mastercard (MA).  The first four are investments of Warren Buffett, while the last two are those of Todd Combs.  I am quoted in several places in this article:

“Of course, you shouldn’t imagine that you’ll make a fast buck emulating Buffett, says David Kass, a professor of finance at the University of Maryland’s business school, who studies Buffett and is a Berkshire shareholder. Buffett is usually looking for out-of-favor companies that are selling at a discount to their intrinsic value. He expects those bets to pay off in a matter of years—sometimes decades.”
“Still, if you’re willing to get rich slowly, there’s no better mentor than Buffett. Standard & Poor’s 500-stock index has returned a respectable 9.9% annualized since 1965, when Buffett took control of a textile manufacturer called Berkshire Hathaway. But Berkshire’s book value (assets minus liabilities), Buffett’s preferred measure of his company’s performance, has climbed an annualized 19.4%. And Berkshire’s A shares (BRK-A), which go back to 1965, have done even better, soaring from roughly $15 to an astonishing $215,421, for a gain of 21.6% annualized. “Investors with patience could do very well following his lead,” says Kass.”
“However, Kass says these purchases (Visa and Mastercard) were likely not orchestrated by Buffett. Instead, he attributes them to Todd Combs, a 44-year-old former hedge fund manager who is investing a piece of Berkshire’s portfolio. Combs owned MasterCard in Castle Point Capital, a hedge fund that he ran, says Kass. Combs was likely looking for opportunities to get back into the stock when he started managing money for Buffett in 2010. Should the wisdom of these investments be discounted because they weren’t made by Buffett? Not at all, says Kass. “The market may give them less weight, but I don’t,” he says.”
“Combs and Ted Weschler, another former hedge fund manager who is now part of Berkshire’s investment team, outperformed Buffett in both 2012 and 2013, according to Berkshire company statements. Berkshire didn’t reveal the relative performance of its investment managers in 2014, but Kass is convinced the newer team members are doing well. “Buffett has been an exemplary investor for 30 years, but Weschler and Combs are exceptional investors, too.”
The entire article is available at Kiplinger.com.
 Posted by at 8:45 pm

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