Recently I wrote an article where I explained why, at this time, Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) is no longer a company I would recommend to someone looking for bargains in the market. Eni (NYSE:E), as I've discussed not long ago, may be a better deal at current market prices.
The fact I would not buy Berkshire now in no way belittles my admiration for Warren Buffett, whose investing skills are unmatched. As a matter of fact, statistics show that in the past three decades, by simply mimicking Buffett's equity portfolio a know-nothing investor could have done better than the market or even outperformed many mutual-fund managers. That is why Berkshire's quarterly 13F filings to the SEC always draw a lot of attention from the financial community, eager to find out what the Oracle has been buying and selling in the previous three months.
By examining the latest holdings report, out of a list of 34, I noticed four stocks that can be bought at a lower price than what Buffett originally paid; buying them might prove a smart move, but is no way a guarantee of success. Even the legendary investor has made a few blunders in the past, so before rushing to your stockbroker's website, be prudent and do your own due diligence.
Bank of New York Mellon (NYSE:BK) - A financial services company. Warren bought almost 2 million shares at an average price of $25.5 in the third quarter of 2010. He then liquidated 10% of the position at a profit, and still retains almost 1.8 million shares. The stock can be bought now for $22.5; that's 12% less than what he paid.
Gannett Co. (NYSE:GCI) - A media company publishing 80 newspapers, and the USA Today magazine. Buffett bought 4.9% of the company at the end of 1994 at an average price of $49, or $24.5 adjusted for the 2:1 stock split that took place in 1997. He reportedly bought 6.9 million shares then, but the most recent filing shows he trimmed his position through the years, and currently holds 1.74 million shares; I don't know whether he sold those 5 million shares and made a profit. The stock trades at $14.5, 40% off Berkshire's investment.
ConocoPhillips (NYSE:COP) - This may one day be remembered as Buffett's biggest investing blunder. In 2008, the Oracle made a huge bet increasing stake in ConocoPhillips four-fold when energy prices were near their all-time high. After peaking near $140, the price of oil plunged to 40 a barrel. As a result, Buffett overpaid for his stake in the energy company, buying at an average price of $84. He then cut his stake in the first half of 2009, losing "several billion dollars", as he admittited in his letter to the shareholders. With COP trading at $77 as of this writing, you can still buy the shares 9% cheaper than he did.
Glaxo Smithkline (NYSE:GSK) - Berkshire disclosed in February 2008 that it held 1.5 million ADRs of the British drug-maker, bought in the last quarter of 2007 at an average price of $51; Berkshire's stake in the company hasn't been changed since. With the shares being traded at $44.8, it means you can save 12% off Buffett's purchase.