Aug 15

Shares Selling for Less than what Warren Buffett Paid for Them

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Warren Buffet is arguably the most successful investor of all time.  Here are some shares that are currently selling for less than what he paid for them.

The Oracle of Omaha, Mr. Warren Buffett (eating at Dairy Queen)

I love Warren Buffett.  One of the richest men in the world; all of his wealth has been self-made.  He made his enormous wads of money by evaluating companies and buying shares in the ones that he felt represented excellent value.  He has been doing this for years through his holding company, Berkshire Hathaway.

There are literally thousands of people that buy shares in Berkshire just so that they can attend the Berkshire annual meeting in Omaha, Nebraska.  He writes a letter to shareholders each year that is read religiously by lots of people.  He is a very folksy and down-to earth guy who is currently giving away about 85% of his billions to support the same types of help projects that Bill Gates does.  He apparently drives a Cadillac DTS that start at $41,990.  I love the fact the he could drive a much more expensive car, but that he chooses not to.  Kudos to you, Mr. Buffett.

I took a look at his most recent letter from 2010.  In it, he gave all of the information that you need to calculate his average shares cost for all of his holding with a value over $1 billion.  Check out page 17.  I found out some very interesting stuff …

Name                                    Cost  (millions)    # of Shares    Avg. Cost    Current Price (Aug.15/11)

(COP) Conoco Phillips          2028                    29109637         69.67                            67.48           

ConocoPhillips is a major international integrated energy company with operations in some 49 countries.

(SNY) Sanofi-Aventis            2060                     25848838         79.69                            35.21

Sanofi-Aventis is a global pharmaceutical company.

(USB)  U.S. Bancorp                 2401                    78060769         30.76                            22.73

U.S. Bancorp is a financial services holding company. They operate full-service branch offices and ATMs, and provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses and institutions.

These prices are intriguing.  Sanofi-Aventis shares are trading at less than half of what Mr. Buffett paid for them.  US Bancorp share are trading at almost a third less than what The Oracle of Omaha paid.  Conoco Phillips shares are trading a slightly less than what he paid.  These look like tempting prices to me.

I find it very exciting when I can find shares at prices better than what the best investor in the world paid for them.  Warren Buffett is the due diligence master.  He looks for shares in companies with “wide moats”; that is companies that have a strong command of their market with high barriers to the entry of new and up-and-coming competitors.  He looks for good value in the shares that he buys: good cash flows, little or no debt, a proven track record of earnings and good earnings momentum, strong management, etc.  He does not buy shares in dud companies.  When I can buy shares for less than what he figured as representing good value, I am very interested.

Now time for the legal stuff that everyone seems to need to include.  I am not a financial advisor.  Before buying and shares, you are advised to seek the advice of a professional advisor.  My highlighting of these shares does not, in any way,  imply my recommendation or endorsement.  Each financial situation is different and I advise you to seek professional advice.  I currently own shares in USB but have no plans to buy any of these other stocks within the next 24 hours. Whew …

I just thought it was worth sharing that some shares are selling for less than what he Oracle of Omaha, Warren Buffett, arguably the best investor of all time, paid for them.  Getting more for less is what froogalism.com is all about.

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Frugal dad – focusing my money and energy towards happiness and the things that matter most since around 1985.

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