Berkshire Hathaway Inc. (BRK.B): Want to Invest like Buffett?

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Warren BuffettGuitarists have Eric Clapton, actors Al Pacino, and basketball players have Michael Jordan.  Investors are fortunate enough to have Warren Buffett, who not only is an incredibly successful investor, but a highly respected philanthropist.  Lecture halls turn to complete silence when the Oracle of Omaha steps up to the podium–everyone wants his secret.

If you follow his company and pay attention to its business, you can see that he keeps things pretty straightforward.  He invests heavily in simple American businesses that have long-term viability, and broadly speaking, he stands by the buy-and-hold investment style.  One important part of his strategy is picking companies with good management.  Unfortunately, as individual investors, we don’t have the luxury of sitting down with Directors and CEOs to get to know them on a personal level.  So how do we know which companies to invest in if we want to invest more like Buffett?

The truth is that no one ever knows for sure, but to improve your odds of selecting some great companies to invest in, why not just add some Berkshire Hathaway Inc. (NYSE:BRK.B) B class shares? Check out which stocks Buffett owns.

Having the world’s most famous money manager handle part of your portfolio isn’t a bad idea.  Over the last 15 years, shares of Berkshire have returned an average of about 7.6% per year, compared to the S&P500′s 4.8% annual return.  In the hedge fund space, the stock is loved by many of Buffett’s peers; Eagle Capital Management keeps about 5.8% of their 13F portfolio invested in the company.  In fact, it’s the fund’s biggest individual holding (see all of Eagle Capital Management’s picks here).

A Director at Berkshire Hathaway, insider Ronald Olson, even added $225,000 worth of Berkshire to his holdings in December.  I’m not the first to think to add on Berkshire Hathaway stock to lock in some low-risk, reliable returns.  If you don’t have a lot of railroad, utility, energy, finance, insurance, or service and retailing companies in your portfolio, this stock would be a fantastic addition.

Let’s take a look at why this is the case.

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