Read to Awake.com - The Warren Buffett Stock Portfolio
He looks at the bear market as the opportunity to buy great businesses at bargain prices. In the bull market, when almost all stock market investors buy stocks, he sells his worst-performing stocks at good prices and waits for the bear market to add more money in his well-performing stocks.
Warren Buffett is the third richest person in this world. He has earned all his money by investing in the stock market. His net-worth is about $47 billion. He has pledged to donate 99% of all his money. Warren invests his money in the stock market for the long-term (at least 10 year). 90% of the stock market investors try to make quick money that is the reason they lose their money in the stock market.
Why You Should Read This Book?
You should read this book to know when warren buy his stocks and how he chooses these stocks. What qualities he looks in the stocks before buying them. In this book, you will find additional information about the 17 companies that Warren Buffett has identified as the best stocks for the long-term. You would learn that Warren Buffett’s key to success is that he knows how to identify strong stocks and he does not buy these stocks in the bull market. Instead he sells some stocks in the bull market. Then he waits to take full advantage of the inevitable crash of the stock market that occurs every 5-6 years.
In the market crash, the stock prices of the strong companies also fall down, this is the time when Warren steps in and buys these stocks at bargain prices. Then he holds these stocks for 3-4 years before seeing any major profit. As the economy starts to improve, the stock prices of these strong companies increase more quickly than other stocks.
The Golden Opportunity
In 2008-09 the stock prices of these companies were selling at the lowest price-to-earning ratios since eighties. Would you like to know about some of these strong stocks that Warren Buffett is buying for his personal portfolio and for Berkshire Hathaway.
Before revealing these stocks, I want you to tell you about one major quality that Warren looks in stocks before buying them. It is the consistency in the earning per share.
Consistency in the Earning
According to Warren, you should not invest in the stocks that are not able to produce consistent earnings in the long-term. For example let’s look at the earning per share of Coca Cola and Ford Motor Company.
Earning Per Share
|Year||Coca-Cola||Ford Motor Co.|
From 2001 to 2011, Coca-Cola increased its earnings by 140%, from $1.60 to $3.85. The total earning per share during this period is $27.52. Now let’s look at Ford Motor Company, from 2001 to 2011, Ford has showed a very erratic earning history. It has lost a total $10,10 during this ten year period. Now according to you which of these two companies do you think will make you richer in the next 10 years? Is it Coca-Cola or Ford Motor Company?
Note: you can predict the future earnings only with the companies that has produced consistent and stable earnings in the last 10 years. Valuations should not be done only by looking at earning per share but you should also look at price-to-book ratio, dividends and other ratios that you will find in this book.
Some of the Top Holdings of the Warren Buffett’s Stock Portfolio
As of 2011, Berkshire owns 200 million shares of Coca Cola. Warren has invested $1.299 billion in this stock. He paid $6.50 per share price on average.
Currently Coca-Cola is trading at $69. You should read this book to understand why and when Warren decided to buy this stock and what qualities he looked for in this stock before buying it.
1. Coca Cola
|Sales||$46.2 billion (2011)|
|Net Earnings||$8.76 billion|
|Per Share Earnings||$3.85|
|Average Annual Per Share Earning Growth||9.18%|
|Average Annual Book Value Growth||12.32%|
As of 2011, Berkshire owns 358,936,125 shares of Wells Fargo. Warren has invested approximately $8 billion in this stock. He has paid $22.32 per share price on average. Currently Well Fargo is trading at $31.
2. Wells Fargo
|Net Earnings||$15.5 billion|
|Per share earnings||$2.85|
|Average Annual per share earning growth||11.15%|
|Average Annual Book Value growth||11.19%|
As of 2011, Berkshire owns 151,610,700 shares of American Express. Warren has invested approximately $1.28 billion in this stock. He has paid $8.44 per share price on average. Currently American Express is trading at $53.
3. American Express
|Revenue (2011)||$30.2 billion|
|Net Earnings||$4.85 billion|
|Per share earnings||$4.05|
|Average Annual per share earning growth||12.2%|
As of 2011, Berkshire owns 72,391,036 shares of Proctor & Gamble. Warren has invested approximately $464 million in this stock. He has paid $6.40 per share price on average. Currently Proctor & Gamble is trading at $61.
4. Proctor & Gamble
|Revenue||$82 billion (2011)|
|Net Earnings||$11.9 billion|
|Per share earnings||$3.98|
|Average Annual per share earning growth||9.82%|
|Average Annual Book Value growth||18.7%|
Final Thoughts on this Book
This is the best book you can read if you want to know where the World’s greatest Investor, Warren Buffett is investing his money and why? You would enjoy the detailed examination of Warren’s stock portfolio. By reading this book you would know more about how to choose good stocks? What are the characteristics of good companies? How to value these companies given their current market price? Using this information, you will surely be able to find attractive investments and make money in the stock market. Best of Luck!
Financial Mail – The Warren Buffett Stock Portfolio: Some Useful Insights
by Ruan Jooste – Thursday, 22 Mar 2012
The book analyses 17 stocks that are now in his portfolio. An abundance of books have been written about Warren Buffett and his investment strategy, and this one, by Mary Buffett & David Clark, The Warren Buffett Stock Portfolio (Penguin) , provides some useful insights into assessing when the time is right to buy stock in a company. By Mary Buffett & David Clark. 225 pages. Simon & Schuster. R.
In 2008, an article in USA Today stated that there were at least 47 books in print with Buffett’s name in the title.
The Warren Buffett Stock Portfolio is the latest one to hit SA bookshops.
The book analyses 17 stocks that are now in his portfolio.
In Warren Buffett’s world, as stock prices decrease, the prospects for investment increase.
In these difficult economic times businesses with a durable competitive advantage are trading at prices and p:e ratios that offer investors money-making opportunities. Forecasting potential future income streams of those prospects tells Buffett whether the stock is an attractive buy.
The Warren Buffett Stock Portfolio explains how to do that. It also conservatively estimates the kind of future return an investment is offering.
SA readers can apply these techniques to a variety of stocks listed on the NYSE Euronext or Nasdaq and use their R4m annual foreign investment allowance to buy them.
Whether the strategy is useful for analysing companies on the JSE is another story. SA companies have been more sheltered from the global financial crisis and many don’t have the long histories studied in the book. SA corporate rules, like those governing taxation — which is highlighted as an important element of the investment decision — are also different.
So the rules should be judiciously applied.
Warren Buffett and the Art of Stock Arbitrage
Mary Buffett and David Clark continue their series of “Buffettology” books by focusing on Special Situations with their latest, Warren Buffett and the Art of Stock Arbitrage.
While Warren Buffett is known for investing in high quality businesses at low prices, much of his success has come from arbitrage or special situations. True “Buffettologists” will remember that in the days of the Buffett Parnership he categorized many investments as “workouts” which fall into this category.
The book begins with a few chapters explaining the basics of arbitrage and why Warren Buffett invests in them.
The authors cover several types of special situations, including:
Merger Arbitrage | Self-Tender Offers | Spin-offs | Liquidations | Reorganizations
Special situation investing consists of making a relatively small profit over a short period of time, generating high annualized returns. For example, let’s say a company announces that it is buying back its stock through a tender offer at $15 per share and immediately the stock price jumps to $14.50. A successful arbitrageur can make a 50 cent profit per share or about 3.4%, which seems like a very small return. However, if this money can be made in a 1 month period, it equates to a 41% annualized return. The book also explains how Buffett uses margin (borrowed money) to juice these returns even higher.
As the authors point out, the key to successful arbitrage investing is “certainty”. Successful investors like Buffett analyze each situation to assess 1) the probability of the event occurring, and 2) how long it will take for the event to occur. In the example above, if it takes 8 months to receive the 50 cent profit, then the annualized return drops all the way to 5.1%. For beginners, the book includes an entire chapter on calculating the annualized return and weighting the probabilities. Those familiar with the math can use a spreadsheet or online calculator.
The strength of the book lies in the case studies. Every type of arbitrage situation includes at least one real-world example, most beginning with the public announcement and continuing to the event’s conclusion. The book is also written in a very easy-to-read style. It took me only a few sittings to get through the entire book.
This breezy style may also be the book’s biggest weakness. The book is targeted at beginners, so it glosses over some of the finer points of special situation investing. It provides little detail on evaluating the likelihood of success, the length of time for completion, or the proper timing of the buy decision. It also skips demonstrating to readers how to properly value a spin-off. Most frustratingly, the book barely covers finding or researching an attractive situation other than “read the Wall Street Journal“. I would have liked a brief summary of key SEC filings and what to look for in those documents since they are the primary research tools for a special situations investor.
Weaknesses aside, I think this book is worthwhile for those starting out in arbitrage or special situations investing and can serve as a refresher for those with a little experience. For those seeking an in-depth look at special situations and arbitrage, I strongly recommend Joel Greenblatt’s 1997 poorly titled classic You Can Be a Stock Market Genius, which covers much of the same territory but is a bit advanced for a beginner.
Because of easy access to data and low trading costs, individual investors can profit significantly from special situations, and better yet they are uncorrelated with the general market. In times of high stock prices, these special situations can help generate positive returns while waiting for the price of quality businesses to fall. Buffett and Clark’s latest is a good introduction to special situation investing.
Foreign Rights as of July 2017
The New Buffettology
|Chinese cc||Yuan Liou Publishing|
Tao of Warren Buffett
|Chinese cc||Eurasian Publishing|
|German (mass market pbk rights)||Boersenmedien|
|Korean||Kugil Media (renewal)|
Warren Buffett and the Interpretation of Financial Statements
|Chinese sc e-book||China CITIC|
|Chinese sc||China CITIC|
|US -- 2nd serial electronic||getAbstract|
Warren Buffett's Management Secrets
|Gujarati||R R Sheth & Co|
Warren Buffett and the Art of Stock Arbitrage
Warren Buffett Stock Portfolio
|Japanese (ebook rights)||CCC Media House|
|Portuguese (B)||Texto Editores Ltda|
|Spanish||Planeta de Agostini|