Invest Like a Pro: Berkshire Hathaway

Imitation is the sincerest form of flattery, right? Well, when you're learning a new skill, imitation can also be a great way to hone your craft.

If you're learning guitar, you might pick up a book of Jimi Hendrix's licks or download the chords to a couple of Bob Dylan's songs. So when you're trying to become a better investor, it only makes sense to take a peek at what the professional investors are up to.

For Fools who don't have the time or inclination to pick individual stocks on their own, Shannon Zimmerman at our Champion Funds newsletter has put together a buffet of mutual funds that have collectively outperformed their benchmarks by 13.4%. For the rest of us, we can tune in directly to what some of the major funds are holding.

You see, the SEC requires institutional investment managers who manage $100 million or more to show their cards via quarterly 13-F filings. This week, I've decided to take a look at one of my personal favorites and one of the most Foolish investors out there -- Warren Buffett. Below, I've gathered up a handful of the largest holdings of his company, Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) -- and, to make things even more interesting, I cross-referenced its holdings against what players in The Fool's CAPS community had to say about the stocks.

Below are five of Berkshire's larger holdings that have also been highly rated by CAPS players.


Market Value of Berkshire Hathaway Stake

CAPS Rating (out of 5)

Coca-Cola (NYSE: KO  )

$10.4 billion


American Express (NYSE: AXP  )

$9.1 billion


Procter & Gamble (NYSE: PG  )

$6.3 billion



$719 million


General Electric (NYSE: GE  )

$305 million


Sources: SEC Filings and CAPS as of July 30.

Now before you jump to it and make any hasty moves, remember that we're looking at what Buffett and Berkshire have done in retrospect. For all we know, since the last 13-F filing, the firm has drastically reduced its holdings in any or all of the above stocks. With that in mind, here are some thoughts on Coke to kick off further research.

Always Coca-Cola
When it comes to investing, Buffett often says that he likes to own businesses that sell products like Snickers candy bars. Why? Because people eat Snickers today, and you can be pretty sure that people will still be eating Snickers tomorrow -- and next year, for that matter. In other words, it's pretty easy to project the future of Snickers sales.

Unfortunately, Mars, the huge candy company that makes Snickers -- and M&M's, Twix, Starburst, Pedigree, Whiskas, and Uncle Ben's rice, for that matter -- is privately owned. Almost 20 years ago, though, Buffett found a brand that easily rivals Snickers. That's right, Coca-Cola.

Now as I mentioned, Coke is hardly a new discovery for Buffett, and he's had it in Berkshire's portfolio for a long while. This, however, doesn't mean that investors have missed the boat on Coke. Since Buffett first started buying, the company has continued to crank out profits and grow.

On the financial side, Coke has a net income margin of 20% and has continually produced a return on equity in the 30s. On the business side, the company has also continued to push forward. In addition to advancing its core brands, it has also been bringing into the fold new brands such as glaceau, the maker of Vitamin Water.

The stock has earned a four-star rating on CAPS, with 1,313 outperform ratings versus 134 underperform ratings. CAPS player rufianno, one of its many fans, simply says "never sell, buy and hold forever." MCKlrobert is another Coke bull and one of the top players on CAPS. He gave a nod to Buffett in his outperform call late last year:

This is one of Buffett's genius purchases. Now is a good time to buy again when the P/E is at its lowest value in a decade.

Eager to read more commentary from the CAPS community on these Berkshire-owned stocks? Hop on over to CAPS and start interacting with the other 60,000-plus CAPS players. While you're checking out these stocks, you can also find out more about more than 4,700 other stocks that are currently rated on CAPS.

More CAPS Foolishness:

Berkshire Hathaway, Coca-Cola, and USG Corp are Inside Value recommendations. Berkshire Hathaway is also a Motley Fool Stock Advisor selection. You can check out any of our newsletters with a 30-day free trial.

Fool contributor Matt Koppenheffer owns shares of USG, but does not own shares of any of the other companies mentioned. The Fool's disclosure policy invests like a pro, but has been told that it plays ball like a girl. It takes that as a compliment.

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