Buffett’s 23.9 Billion Reasons To Buy

| November 8, 2011 | 0 Comments

Do you know when stocks are cheap?

It’s a simple question.  But it can confuse new and experienced investors alike…

One guy who isn’t confused is Warren Buffett.  He’s mastered the art of value investing.  And he’s built Berkshire Hathaway (BRK/A and BRK/B) into a global empire by investing huge sums of money when stocks are cheap.

Well, last quarter the Oracle of Omaha invested more money than he has in any quarter over the last 15 years.  That’s simply shocking to me…

In fact, the only time he came close to investing this much was in 2008. And stocks were dirt cheap then because of the credit crisis.

In other words… Buffett thinks stocks are cheap right now.

He invested an eye popping $23.9 billion in the third quarter.  And $7 billion of it was directly invested in stocks.

I’m not talking about the sweetheart deals only available to Buffett either.  He put $7 billion to work buying the same stocks available to you and me.

And he’s still ramping up his purchases.

Get this… He invested only $834 million in the 1st quarter.  Then he invested $3.62 billion in the 2nd.  And then he nearly doubled it to $7 billion last quarter.

And here’s the kicker…

Earlier this year, Berkshire disclosed new stakes in MasterCard (MA) and Dollar General (DG).  But they’re not reporting everything they’re buying.

Berkshire is omitting information about their US stock holdings.  And it’s perfectly legal too!

You see, the SEC will let companies like Berkshire withhold the info while they’re in the process of buying or selling stocks.  It prevents others from front running or even copying their investments until they’ve had enough time to establish or liquidate a position.

It’s a good bet Berkshire’s in the process of adding some new companies to their portfolio.

The question everyone wants answered of course… “What stocks are they buying?”

Unfortunately, there’s no way to know for sure.  At least, not until Berkshire’s already bought all they want.

If I had to guess, I’d say he’s investing in a multinational manufacturing firm like 3M (MMM) or United Technologies (UTX).

Remember, Buffett typically invests in consumer and financial stocks.  But over the last few years, he’s been moving more towards industrial stocks.  And I wouldn’t be surprised to see that trend continue with a new investment in a big manufacturer.

But there’s really no reason to guess.  You can just buy BRK/B instead.

For around $77, Berkshire’s B class shares are a smoking deal.

And Berkshire’s stock will likely pop when they finally report what stocks they bought and how much they paid for them.

What’s more, Berkshire authorized its first ever stock buyback in September.  So anytime Mr. Buffett thinks their own stock is cheap, they can buy it.

Clearly, Buffett thinks stocks are cheap.  He’s in full blown stock buying mode.  And he thinks Berkshire’s stock is so undervalued, he’s repurchasing shares for the first time ever.

Consider adding Berkshire Hathaway to your portfolio today.

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Category: Stocks

About the Author ()

Corey Williams is the editor of Sector ETF Trader, an investment advisory service focused on profiting from ETFs and the economic cycle. Under Corey’s leadership, the Sector ETF Trader has become one of the most popular and successful ETF advisories around. In addition to his groundbreaking service, Corey is the lead contributor to ETF Trading Research, where he shares his insights about ETFs and financial markets on a daily basis. He’s also a regular contributor to the Dynamic Wealth Report and the editor of one the hottest option trading services around – Elite Option Trader.

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