Isn’t it interesting to know Warren Buffett’s top 10 holdings? Hopefully there are some things for us to learn by looking at Warren Buffett’s favourite stocks. I have found an article from fool.com on Warren Buffett’s favourite stocks (dated 22 Aug 2007).
1) Coca-Cola - soft drinks
2) Wells Fargo - banking, insurance, investments, mortgage and consumer finance
3) American Express - credit cards, financial services, travel services
4) Procter & Gamble - consumer products such as Pampers, Tide, Ariel, Gillette, Pantene, Bounty, Folgers, Pringles
5) Johnson & Johnson - consumer products, medical devices and diagnostics and pharmaceutical
6) Burlington Northern Santa Fe - railway delivering cars, coal, clothing, games and nearly anything else found in homes and businesses
7) Wesco Financial - insurance, furniture rental, and steel service
8) Moody's - credit ratings, research and risk analysis
9) Anheuser-Busch - Bud Light and Budweiser (beer)
10) ConocoPhillips - petroleum exploration and production, refining, marketing and supply; natural gas gathering, processing and marketing.
Most of the top 10 companies are household names with very strong brand names globally and enjoy recurrence sales. The business of these companies is simple, with growth potential and easy to understand. Most of these companies offer products/services that meet consumers’ basic needs and has certain degree of immunity to the business cycle. For example, you always need a credit card, your decision to drink coke is not affected by economic crisis and you will still shave even in times of recession.
A few years ago, my coursemate and I were looking into Super Coffeemix, a listed company on the SGX. We believe that Super Coffeemix has most of the characteristics of a company that Warren Buffett will buy. The most obvious attribute is that it had huge market share for instant coffee in Singapore. However, it was also around that time that local tycoon Mr. Oei Hong Leong invested in the company at less than 30 cents. I was slow in action and subsequently refused to invest in Super Coffeemix. I was very obstinate as I hate buying shares at a price that is higher than those tycoons. I felt that if I do it, it is as good as giving money away to these rich men.
As expected, Super Coffeemix continued to report higher profit year after year and together with strong market sentiment, it share price surged 100% by Mar 2006. Then one of my friends, who was learning value investment asked for my opinion on Super Coffeemix. I replied that it is a wonderful company and shared with him on Super Coffeemix’s history. I recommended a “buy” even when the price had surged 100%. He bought it and lock in his profit when Super Coffeemix’s share price surged pass 60 cents. I told him that he had made a wrong move for failing to understand its growth potential; he failed to recognise Super Coffeemix’s brand-power. And what’s my problem? I am super obstinate.
2) Wells Fargo - banking, insurance, investments, mortgage and consumer finance
3) American Express - credit cards, financial services, travel services
4) Procter & Gamble - consumer products such as Pampers, Tide, Ariel, Gillette, Pantene, Bounty, Folgers, Pringles
5) Johnson & Johnson - consumer products, medical devices and diagnostics and pharmaceutical
6) Burlington Northern Santa Fe - railway delivering cars, coal, clothing, games and nearly anything else found in homes and businesses
7) Wesco Financial - insurance, furniture rental, and steel service
8) Moody's - credit ratings, research and risk analysis
9) Anheuser-Busch - Bud Light and Budweiser (beer)
10) ConocoPhillips - petroleum exploration and production, refining, marketing and supply; natural gas gathering, processing and marketing.
Most of the top 10 companies are household names with very strong brand names globally and enjoy recurrence sales. The business of these companies is simple, with growth potential and easy to understand. Most of these companies offer products/services that meet consumers’ basic needs and has certain degree of immunity to the business cycle. For example, you always need a credit card, your decision to drink coke is not affected by economic crisis and you will still shave even in times of recession.
A few years ago, my coursemate and I were looking into Super Coffeemix, a listed company on the SGX. We believe that Super Coffeemix has most of the characteristics of a company that Warren Buffett will buy. The most obvious attribute is that it had huge market share for instant coffee in Singapore. However, it was also around that time that local tycoon Mr. Oei Hong Leong invested in the company at less than 30 cents. I was slow in action and subsequently refused to invest in Super Coffeemix. I was very obstinate as I hate buying shares at a price that is higher than those tycoons. I felt that if I do it, it is as good as giving money away to these rich men.
As expected, Super Coffeemix continued to report higher profit year after year and together with strong market sentiment, it share price surged 100% by Mar 2006. Then one of my friends, who was learning value investment asked for my opinion on Super Coffeemix. I replied that it is a wonderful company and shared with him on Super Coffeemix’s history. I recommended a “buy” even when the price had surged 100%. He bought it and lock in his profit when Super Coffeemix’s share price surged pass 60 cents. I told him that he had made a wrong move for failing to understand its growth potential; he failed to recognise Super Coffeemix’s brand-power. And what’s my problem? I am super obstinate.
In Jul 2007, just before the exposure of US subprime woes that cause global market to plunge, Mr Oei Hong Leong disposed off his entire 13.17% stakes in Super Coffeemix and bagged approx. $40 million profit!!! Supercoffee was trading at around $1 then.
In my next article, I will share and analyse another local company with strong brand.
