Warren Buffett Goes Shopping

If you can't beat 'em, join 'em.

It's not surprising that mimicking Warren Buffett's moves over the years would leave you well ahead of the pack. That's why it's great news that as an elephant-sized investment vehicle, Buffett's Berkshire Hathaway (NYSE:BRK-A) is required to periodically report some of its investments.

The biggest move as of late, and probably the biggest move of Buffett's career, is the acquisition of rail giant Burlington Northern Santa Fe (NYSE:BNI). Buying the $26 billion of Burlington that Berkshire didn't already own is the largest acquisition Berkshire has ever made.

In an interview with Charlie Rose this week, Buffett admitted he wasn't paying a bargain price, saying a "reasonable return is good enough." That's what happens when your balance sheet becomes staggeringly large. Outsized returns diminish with size. Several years ago, Buffett elaborated on this, saying, "I used to have more ideas than money. Now I have more money than ideas." No doubt, Burlington looked like an area to invest tens of billions of dollars and still achieve reasonable long-term returns -- no easy feat.

But what else has Buffett been up to? Have a look:

Purchases:

Sales:

One important thing to note: Smaller transactions are typically done by Lou Simpson, investment chief at GEICO (a Berkshire subsidiary), and not necessarily by Buffett himself. That said, the only purchases I'd say almost certainly came from Buffett's end are Wal-Mart and Wells Fargo. So we'll focus on those.

Wal-Mart is an interesting purchase because it's putting faith in the American consumer, but hedging that faith by betting on the frugality that Wal-Mart relies on. The past several decades were largely built on consumers trading up to luxury goods. The next several will likely be based on a new sense of frugality where the cheapest retailer, like Wal-Mart, wins. The amount of debt consumers are trying to work through makes this a near certainty.

The Wells Fargo purchases aren't too surprising; Buffett's been praising the bank all year. Few can argue that Wells Fargo isn't a world-class bank, particularly because of its low cost of capital. He's also been buying shares for the better part of this year, so saying these current purchases signal a change in Buffett's view of the financial system isn't accurate.

Back in October, my Foolish colleague Alex Dumortier took a stab at Wells Fargo's valuation, writing, "Wells Fargo shares are no longer a screaming buy, but I do expect them to beat the market's return by several percentage points."

One big question mark still hanging above Wells Fargo is the $25 billion TARP investment the U.S. Treasury holds. Unlike several of its peers, Wells Fargo hasn't been granted permission to repay the funds (which is slightly ironic, because Wells was really the only bank adamant that it didn't need the money last fall). When that happens, and how it happens, will seriously impact common shareholders.

If the goal is to maintain current capital ratios, the money will either have to come from earnings or via capital raises that dilute shareholders. At any rate, shares apparently still look attractive to Buffett, and I'm not nearly rich enough to argue otherwise.

What do you think about Buffett's latest moves? Feel free to share your thoughts in the comment section below.