Regular investors routinely "coattail" the securities holdings of mutual funds, portfolio managers and high profile investors in hopes of generating a high rate of return, but, unfortunately, few professionals have truly been worth effort over long periods. They simply lack the ability to generate consistent and solid returns year in and year out. The exception, of course, is Warren Buffett.
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Buffett is chief executive of the investment firm Berkshire Hathaway (NYSE:BRK.A, BRK.B). He has led Berkshire through both good economic times and bad, and despite of some pretty challenging years Berkshire has posted a compounded annual gain in per-share book value of 20.3% from 1965 through 2009. That's more than double the compounded annual gain of 9.3% posted by the S&P 500 during that time. With returns like that its no wonder his net worth is said to be in the neighborhood of $60 billion! (The don't call him "The Oracle of Omaha" for nothing. Learn how Buffett comes up with his winning picks in Think Like Warren Buffett.)
Buffett isn't an active trader who constantly darts in and out of stocks. His investing style can best be summed up as "buy and hold", a strategy he likely picked up as a student of legendary investor Ben Graham. (To learn more, check out What Is Warren Buffett's Investing Style?)
So, what are Buffett's investment holdings, and how can they be accessed?
Buffett owns many stocks. Here is a list of some of the biggest, and most high profile positions:
|Procter & Gamble
|Johnson & Johnson
One place to start is to review Buffett's annual letter to shareholders on the Berkshire site. In it he will detail holdings. Changes to holdings are made public quarterly and can be researched by perusing filings on the SEC website. Also, sites such as CoattailInvestor.com can help you see the complete holdings of some of the world's great investors including Warren Buffet.
Johnson & Johnson
Healthcare product and pharmaceutical companies are seen by many investors as a good area to invest in because there will likely be a strong demand for medicine and healthcare related products as the world's population grows and ages. Johnson & Johnson sports an array of big brands that you've probably heard of including: Johnson's Baby Shampoo, Neutrogena, Lubriderm, Listerine, Tylenol, and Neosporin.
The company is expected to earn $4.75 a share this year, which means it trades at about 13.2-times the current year estimate. Its also expected to grow at a roughly 5.97% pace per year over the next five years. That's not too shabby for a company that has $60+ billion in expected revenue. Finally, it pays a dividend. The current yield is about 3.5%.
Procter & Gamble
Ohio based P&G is well known for its products, many of which can be found in our cabinets at home. Among its more popular brands are: Old Spice, Clairol, Charmin, Pampers, and Duracell. Many investors like the company because its products are often necessities that consumers purchase in good times and in bad.
P&G is expected to earn $3.98 per share this year, and $4.37 per share in fiscal 2012. It's also expected to grow at around 9% per year during the next five years. As a bonus it also pays a dividend. The current yield is about 3%.
Mimicking Buffett is no guarantee of success. However, the last roughly 40 years have shown that following the Oracle's moves has generally been a pretty good idea. For further reading, be sure to check out Warren Buffett: The Road To Riches and Warren Buffet: How He Does It.