The Warren Buffett Stock Portfolio: Warren Buffett's Stock Picks: When and Why He Is Investing in Them

The Warren Buffett Stock Portfolio: Warren Buffett's Stock Picks: When and Why He Is Investing in Them

Posted by jack_miller | Published a year ago

With 83 ratings

By: Mary Buffett, David Clark, et al.

Purchased At: $25.00

Best-selling authors Mary Buffett and David Clark examine 17 companies that Warren Buffett has bought for himself and for his holding company, Berkshire Hathaway, as durable investments and explain why these companies are once again selling at prices that offer great long-term growth prospects. Warren Buffett has always believed that the time to buy stocks is when nobody else wants them. As we enter the fifth year of what many economists are calling the Great Recession, we find that some of the most amazing businesses—those with a durable competitive advantage—are trading at prices and price-to-earnings ratios that offer investors serious long-term moneymaking opportunities. Pessimism about the banking situation in Europe and unemployment in America have created the perfect storm to bring stock prices down and present value-oriented investors some great possibilities.

In Warren Buffett’s world, as stock prices decrease, the prospects for investment increase. Putting a number on those prospects tells Warren whether or not the stock is an attractive buy. The Warren Buffett Stock Portfolio explains how to do just that—how to value companies and conservatively estimate the kind of future return that an investment is offering at its current market price. Mary Buffett and David Clark look at stocks in Warren’s portfolio as the basis for their analysis.

After a brief history of Warren’s investment strategy, Buffett and Clark explain how to interpret a company’s per-share earnings and per-share book-value histories to quickly identify which companies have a durable competitive advantage and to project the compounding annual rate of return that an investment offers. The authors provide case studies and evaluations of seventeen companies in Warren Buffett’s portfolio.

The Warren Buffett Stock Portfolio is a valuable companion to the other books in Buffett and Clark’s successful series—Buffettology, The Buffettology Workbook, The New Buffettology, The Tao of Warren Buffett, Warren Buffett and the Interpretation of Financial Statements, Warren Buffett’s Management Secrets, and Warren Buffett and the Art of Stock Arbitrage.

I originally thought I would list some pros and cons regarding this book, but it occurred to me that depending on what you are looking for, aspects of this book may appeal to you--or maybe not so much. Using a get-to-the-point-quickly approach, here are some observations that hopefully will help you decide whether this book is right for you:

1. This book is short and sweet. Some readers (perhaps many) will get through this book in just one sitting. Depending on your available time, reading speed and familiarity with investing, I estimate this book might take, at most, two or three sittings. I don't read that fast, and I finished it in one evening. It is nominally 211 pages long, exclusive of the introduction and index. However, there are enough blank or partially blank pages, pages with tables that list the last 11 years of earnings for XYZ company (one year per line), and pages with very standard information about companies (name, address, phone number, website, year founded, etc.--again, one item per line) that an adjusted number of pages is closer to 150. Moreover, this is a physically small book, so its 150 pages of content would amount to something closer to 110 - 120 more normally-sized pages, at most. If you prefer a short, very easy to read book, this may be right for you.

2. Basically, the authors attempt to explain a simplified version of Warren Buffett's investing style, which they finish by page 46, and then they use the rest of the book to illustrate how Mr. Buffett's investing approach can be applied to 17 companies that Buffett has picked for Berkshire Hathaway. I think it is fair to say that some readers may find the discussions regarding the 17 companies somewhat repetitive, even though there are obviously some differences in what these companies do. (You don't have to buy this book to find out which companies Mr. Buffett has invested in, since that information is publicly available. The companies are: American Express, Bank of New York Mellon, Coca-Cola, ConocoPhillips, Costco, GlaxoSmithKline, Johnson & Johnson, Kraft, Moody's, Procter & Gamble, Sanofi, Torchmark, Union Pacific, U.S. Bancorp, Wal-Mart, Washington Post, and Wells Fargo.)

3. The co-authors of this book are Mary Buffett and David Clark. Ms. Buffett was married to one of Warren Buffett's sons for 12 years, and that experience is billed as a source of her unique insight into Warren Buffett's ways. The other co-author, Mr. Clark, has followed Mr. Buffett and Berkshire Hathaway for a long time and is the managing director of an investment partnership. It isn't clear how much each author contributed to the book. There is no indication that Warren Buffett has endorsed this book. There are no indications to the contrary, either. (If I was Ms. Buffett and I had received any quotable encouragement from Warren Buffett, I would have been sure to mention it somewhere in the book.) This is the eighth book written by these two authors, and they all address investing and have "Buffett" somewhere in the title.

4. The approach used by the co-authors can be simplified this way: Find a company with a durable competitive advantage (so that its future results may be somewhat predictable), figure out its average growth rate (regarding earnings per share) over the last 10 years, use this historical growth rate to project earnings forward 10 years, and then use this future earnings figure together with a conservative valuation (e.g., a price/earnings ratio) to estimate the company's future stock price. Then add in dividends and calculate an estimated annual investment return. The authors go so far as to literally guide you, step-by-step, in using a financial calculator to do the essential math.

5. To the extent that a company's future growth resembles its past growth, and to the extent a company's future price/earnings ratio resembles its historical ratios, this method can prove helpful. However, when the economic, business or competitive environments change, things can get tricky. That's when Warren Buffett will do much better than the average investor. His uncanny insight into business is not easily summarized in any book, short or long, because his insight is derived from many years of personal study and unique experience.

6. So can this book be useful for someone looking for a better understanding of what drives stock returns? Yes indeed. For someone reasonably familiar with Mr. Buffett's approach, however, this book does not plow a lot of new ground. (I expect the authors might differ from me on this point, but I'll stick with this assessment.) I wouldn't hesitate to give this book to one of my adult children--or anyone unfamiliar with the general Warren Buffett approach--as a useful primer with a number of specific examples.

- joyce_scott

In the recession of 2008-2009, when stock market was falling and most people were selling their stocks, the all-time greatest investor was buying stocks. According to the Warren Buffet, the best time to buy stocks is when nobody wants to buy them.

Warren looks at the bear market as the opportunity to buy great businesses at bargain prices. In the bull market, when almost all stock market investors buy stocks, he sells his worst-performing stocks at good prices and waits for the bear market to add more money in his well-performing stocks.

Why You Should Read This Book?

1. You should read this book to know when warren buy his stocks and how he chooses these stocks. What qualities he looks in the stocks before buying them. In this book, you will find additional information about the 17 companies that Warren Buffett has identified as the best stocks for the long-term.

2. You would learn that Warren Buffett's key to success is that he knows how to identify strong stocks and he does not buy these stocks in the bull market. Instead he sells some stocks in the bull market. Then he waits to take full advantage of the inevitable crash of the stock market that occurs every 5-6 years.

3. In the market crash, the stock prices of the strong companies also fall down, this is the time when Warren steps in and buys these stocks at bargain prices. Then he holds these stocks for 3-4 years before seeing any major profit. As the economy starts to improve, the stock prices of these strong companies increase more quickly than other stocks.

4. In 2008-09 the stock prices of strong companies were selling at the lowest price-to-earning ratios since eighties. Would you like to know about some of these strong stocks that Warren Buffett is buying for his personal portfolio and for Berkshire Hathaway.

5. After reading this book, you would know more about how to choose good stocks? What are the characteristics of good companies? How to value these companies given their current market price?

Using this information, you will surely be able to find attractive investments and make money in the stock market. Best of Luck!

- aria_martin

This is a good step by step introduction into a form of value investing. All the numbers and calculations are thoroughly explained, and the reasons behind why they are used are detailed. It's a great book for those starting to invest, as it's short and detailed with great examples. You want to do better than, "hmmm....seems like Ford will go up?" Then this book is for you.

- tinley_clark

This book has some very useful kernals of information. Very worthwhile!

- kailani_lee

Despite some bad reviews of Mary Buffets books, if you read this one, along with buffetology or the new one and her interpretation of financial statements. All of which are similar but have a few small different key details in each they make sense. If you want to you can compare these to what is said in the snowball if you are unsure.

I know all this sounds to simple for many, but this is aiming for 10%-15% average annual returns, not to get rich quick. It took Buffet quite a while and what Mary is explaining is not how Buffet started with cigar butts but how he picks stocks now.

- remi_carter

I'm fully satisfied.

- yehuda_flores

Fantastic Book!

- ayan_miller

Originally checked this book out from the library. Renewed it till the library made me bring it back. So I jumped on Amazon & purchased my own copy. It has so much information. Not loaded down with a bunch of useless garbage. Gets an "A+" from me.

- sylvie_castillo

This book really did convert me from a Ben Graham style approach to investing to Warren Buffett's. That being to buy wonderful companies at fair prices than mediocre companies at cheap prices. Buffett never wrote off the principals taught by Ben Graham, he just took them and evolved them and took them to the next level. Lots of good examples of great companies and why a durable competitive advantage is important. This is a must read for any value investor.

The author was Warren Buffett's daughter in law for 12 years so knew Warren really well and learn't a lot from him.

A few small but obvious errors in the book but every book has a few errors such as typos in.

Don't be turned away from the book because you think that it will try and turn you away from Ben Graham all together. Warren Buffett still uses Mr Market and margin of safety principles and espouses Graham, albeit in a different form. That begin he buys companies with good economics in their favour and a durable competitive advantage at a fair price.

- alaya_stewart

Some good knowledge

- lachlan_patel

Really good book to read, well recommended

- melody_nelson

Not so god book. The first 50 pages tell how buffet picked his stocks ; this includes EPS growth of his stocks in 10 years of period from 2001 to 2011.

The remaining part of the book contains too much repetitive information. The EPS of the stocks consumes 30% of the book. Nothing much interesting if you know have already read investopedia.

- karlie_gomez

Must read for any investor. Warren has looked at about 15 to 20% growth, but has had about 27 - 28% growth. The policies are just ROBUST for anyone to follow. Some extra work of finding the fundamentals is needed, but getting 1 or 2 stocks right per year is enough and can really give excellent results. I am getting that with his steps.

- gabriel_walker

Was sich auf dem Cover noch vielversprechend anhört, ist eine schon fast unverschämte, an Oberflächlichkeit kaum zu übertreffende Pseudo-Analyse der Portfoliofirmen von Berkshire, die bauernschlaue "Bewertungsmethode" (stumpfes Fortschreiben der Vergangenheit) teilweise sogar grotesk fehl-angewendet. Das Buch wirkt insgesamt so, als wäre es innerhalb von wenigen Tagen geschrieben worden, ohne dass jemals eine Person mit wirtschaftlichem Sachverstand Korrektur gelesen hat.

Die Einführung zu jeder Firma enthält noch interessante Anekdoten zur Historie, aber schon die Beschreibung der Geschäftsmodelle ist meist extrem simplifizierend – mehr für einen Bierdeckel als ein Sachbuch geeignet - und mögliche Risiken werden komplett ignoriert.
Die Bewertung allerdings – die als Kern des Buches angepriesen wird (wie macht es Buffet?!) - ist unglaublicher Humbug: hier wird die durchschnittliche Wachstumsrate der letzten 10 Jahre und die Dividende des letzten Jahres einfach für die nächsten 10 weiter fortgeschrieben. Dazu wird dann ein historischer Multiplikator daraufgelegt, Rendite ausgerechnet, fertig. Das wird sklavisch für jede Firma so gemacht, Textbausteine größtenteils kopiert mit ausgetauschten Zahlen, und egal ob die Wachstumsraten der letzten Jahre evtl. besonders hoch oder niedrig waren, mit entsprechend teilweise absurden Werten. Besonders grotesk ist das Beispiel von Conoco, ein Unternehmen das massiv vom Ölpreis abhängt. Hier wurde trotz der gigantischen Ölpreisrally im 10-Jahres-Zeitraum absurderweise das historische Gewinnwachstum weiter fortgeschrieben und dementsprechend ein astronomisch hoher Wert errechnet.

Man hat das kurze Buch schnell gelesen, trotzdem ist die Zeit verschwendet, ich kann jedem nur abraten.

- ronald_reyes

Good but expected somethig better.There is nothing more than the list of portfolio names.

- riley_harris

A very good book to read if you want to advance your ability to select profitable stocks.
Clearly written and thorough. Allows the reader to understand Buffett's investing process and why he chooses the stocks he buys.
It helps to know something about the stock market but virtually anyone with the interest would gain knowledge by reading this book.
I was a stockbroker for 35 years and I learned a great deal from this book.

Yours Truly,

Helen Crichton

- donovan_lee

I had ordered the complete series of books written by Mary buffet and David Clark on sir warren buffet but in my shipment this book was missing and it is now showing as deliverd.

- anders_alvarez

As an investment enthusiast I was always fascinated with Warren Buffet and wanted to know his investment journey. This book indeed talks about his philosophy behind his stock selection.

- liliana_rodriguez

Well written. Easy style of writing makes the world of investing seem so practical and accessible.

- emilio_stewart

This book is all filler no thriller. There is a very small amount of useful information and that info isn't even clear AND I have found confusing typos amongst the already confusing calculations (eg writing 2011 instead of 2002, not great when you are trying to do a calculation!) .

More than 3/4 of the book is simply filled with about 20 companies that Warren has invested. The detailed in analysis of each company is extremely repetitive.

Only buy this book if you r savy in Maths and u can get it for £2 inc p+p.

- marcelo_bennet

The book has many examples which is repetitive and this consists of the majority of the book. I liked it, but not sure if others might.

A decent book if you are new and interested in stocks.

- lyric_green

This book is good only if you are good to relate this book with Indian market.
All case studies are based on foreign markets.

- alexzander_white

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