Buffett's Befitting Bud Buy

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Yesterday, brewer Anheuser-Busch (NYSE: BUD) jumped nearly 6.5% when it announced that Berkshire Hathaway (NYSE: BRKa) (NYSE: BRKb) had acquired a significant position in the company. Why would anybody care? Warren Buffett, arguably the best and indisputably the richest investor in the world, runs Berkshire. Historically, where he goes, outstanding profits frequently follow.

When you look at Anheuser, you can see why Berkshire decided that the company was attractive. It's similar to other Buffett purchases like Procter & Gamble (NYSE: PG) and Gillette (NYSE: G). The company is a consumer powerhouse; it owns nearly 50% of the U.S. beer market. Its moat against competition is huge, its return on equity has been a massive 30% to 80% for the past five years, and it pumps out $2 billion in free cash flow a year.

But there are three interesting things about this purchase. First, it has the potential to turn Berkshire's annual meetings, generally a festive atmosphere anyway, into a riot. Buffett has frequently guzzled Cherry Coke (NYSE: KO), one of Berkshire's other large holdings, at the annual meetings. If he trades that Coke for a six-pack of Budweiser, the 2005 annual meeting could be one that we'll never forget.

The second interesting thing is that the purchase was disclosed in a press release. Buffett's quite willing to promote the products of the companies that he buys. However, he's generally more circumspect about companies he's purchasing, and has even gone as far as requesting special exceptions to defer filing statements that disclose his holding. This makes sense, particularly in light of the jump Anheuser Busch took yesterday; Buffett doesn't want news of his purchases to push up the price of a stock he's buying.

So, the fact that this purchase was revealed is interesting. Perhaps it means that Berkshire has bought as much as Buffett wants. But, considering the piles of cash that Berkshire holds, and Buffett's willingness to buy entire companies, I would have expected that Berkshire would be happy to buy as much of the company as people are willing to sell. Consequently, the revelation of the position at this point is curious.

The third interesting thing is that Buffett's purchase comes soon after Philip Durell recommended Anheuser-Busch in Motley Fool Inside Value. In fact, it seems likely to me that Berkshire was picking up shares at the same time as Inside Value subscribers. Really, this isn't that surprising. It's not because Philip had any idea what Buffett was doing. Rather, it's because great value investors recognize a bargain when they see one. So, they frequently independently come to the same conclusions about a company's potential as an investment.

If you're interested in finding out what other stocks Philip sees as attractive now, you can find out with a free 30-day trial to Inside Value. Or, for a limited time, you can purchase a subscription at a 25% discount to the regular price.

Fool contributor Richard Gibbons, a member of the Inside Value team, yearned for a Coke while writing this article but does not own shares in any of the companies mentioned in it.