My jaw hit my chest when I heard it.

I sat dumbfounded at Buffett-Fest '09, otherwise known as the Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) annual meeting. As one of 35,000 value investors who trekked to Omaha, Neb., last weekend to hear the wisdom of Warren Buffett, I nodded my head along with the rest of the crowd for most of the day.

Judge a company by value, not stock price. Nod. America will recover from this financial crisis. Nod. Derivatives are bad. Nod. Wells Fargo (NYSE:WFC) is the best stock in the world to go all in on. Huh?

I knew that Warren Buffett was standing by many of the banks in his portfolio -- namely Wells Fargo, US Bancorp, and M&T Bank. So I wasn't all that surprised when he said that "[Berkshire] would buy stock in any of the three at current prices."

But, as you know if you've been reading the Fool site this week, he took it oh so much further: "If I had to put all of my net worth into one stock, that would be the stock."

The caveat is that he was referring to Wells' March lows, below $9 a share. Shares are up above $25 now, so Buffett probably wouldn't be so emphatic at present.

But still!
I'll buy that Wells Fargo had tremendous upside potential in the single digits (some argue it still does), but the possible downside precludes me from naming Wells Fargo my "if-I-had-to-go-all-in" stock.

I've said in the past that you need three things before it's wise to invest in a bank:

  • Particular insight into bank balance sheets.
  • An unshakable faith in that bank's management.
  • Comfort in speculating on the final form of the government bailout initiatives.

With the possible exception of a handful of Wells Fargo employees, no one knows Wells Fargo's balance sheet as well as Warren Buffett. And Buffett has grown very familiar and trusting of Wells' management throughout the years. But even he doesn't know for sure what path the government bailout initiatives will ultimately take.

Now, am I calling his continued investment in Wells Fargo foolish? My head shakes no. His expertise in all three areas I've mentioned exceeds that of most other investors. So while the remaining uncertainty surrounding the government's role in banking has me disagreeing with Buffett's extreme statement, I don't think he's foolish to invest a portion of Berkshire's money there.

However, I will turn to his investing prowess to find my own top investments. Here are three companies Buffett owns that I'd choose over Wells Fargo as an all-in stock -- even at their current not-quite-bargain-basement current prices. These three all have products that will still be in demand decades from now, and they have no need for government support:



Wal-Mart (NYSE:WMT)


Johnson & Johnson

Intellectual Property, Brand

Procter & Gamble


You'll notice that Berkshire has significant holdings in all three of these companies. Wells Fargo isn't even the safest bet in his own portfolio!

Hey, what about the others?
I promised you five companies that beat Wells. For a fourth, I'll turn to my Foolish colleague Joe Magyer, who has declared ExxonMobil (NYSE:XOM) the greatest company in the history of the world. Um, I'm not quite that bullish on ExxonMobil, but I certainly agree that it's time to consider buying some oil plays.

For my fifth company, I'll cheat a little -- but hey, Buffett did too, in recommending Wells at less than half of today's price. I'd pick Visa (NYSE:V) or MasterCard (NYSE:MA) -- I'm largely agnostic between the two, since they share virtually identical business models. They are the two biggest names in an industry with high barriers to entry, one that boasts great growth prospects as we get closer to a cashless world. Remember also that their partner banks are the ones that actually provide credit; so although Visa and MasterCard could suffer from lower near-term volumes, they won't have credit-related writedowns. They're richly valued right now, but I'm hoping for better prices as the credit card market hits turbulence. Like Buffett often does, I'll sit patiently, ready to strike.

Don't get giddy yet
Just so we're clear, it's never a good idea to put all your money into one stock (even if that stock is Berkshire Hathaway). And if Wells Fargo falls back into single digits, don't go overboard taking Buffett's statement to its logical extremes. All the stocks I've mentioned should be researched thoroughly and used only as part of a well-diversified portfolio.

Since we've been considering an extreme case, I've been purposely risk-averse in the five stocks I've mentioned. Though certainly not without risk, all of them let you sleep pretty well at night. My fellow Fools over at our Inside Value newsletter service have performed a similar exercise, singling out their top five stocks for new money. Actually, they've done me one better, picking their top five on a risk-adjusted basis and their top five based on highest potential upside. Unlike Buffett, they don't have Wells Fargo on the latter list -- but another financial company did make the cut. If you'd like to see their recommendations, I invite you to take a free 30-day trial by clicking here.

Anand Chokkavelu owns shares of Berkshire Hathaway. He tries his hardest not to go all in before the flop with a pair of queens. Berkshire Hathaway is a Motley Fool Stock Advisor pick. Berkshire Hathaway and Wal-Mart are Motley Fool Inside Value picks. Johnson & Johnson and Procter & Gamble are Motley Fool Income Investor recommendations. The Fool owns shares of Procter & Gamble and Berkshire Hathaway. The Fool has a disclosure policy.