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Warren Buffett’s Long Term Investing: The Coca-Cola Company (KO), American Express Company (AXP), and More

At Insider Monkey, we track quarterly 13F filings from hundreds of hedge funds and other notable investors- including, of course, Warren Buffett’s Berkshire Hathaway. We’ve found that the information in these filings can be useful in developing investment strategies; for example, the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy). Some of Buffett’s largest holdings at this time are positions which he has bought most of over the last couple years, but for the most part he is a long term investor. Read on for our quick take on the five largest positions in Buffett’s most recent 13F portfolio which Berkshire had owned at least $1 billion of at the end of 2010 (or see the full list of the holding company’s stock picks over time).

For a long time, The Coca-Cola Company (NYSE:KO) has been one of Buffett’s favorite stocks, and a classic example of a consumer stock which persistently earns a large brand premium; one of Buffett’s contributions to value investing theory is that brand power should be given a good deal of weight compared to a stock’s quantitative value metrics. However, The Coca-Cola Company (NYSE:KO) currently trades at 22 times trailing earnings, so it does not look that attractive right now. The Bill and Melinda Gates Foundation Trust reported a position of over 34 million shares in its own 13F filing (check out more stocks the trust owns).

Warren Buffett Coca-Cola Company (KO)

Wells Fargo & Co (NYSE:WFC) was one of Berkshire’s top stock picks at the beginning of 2011, and is now the holding company’s largest position after adding more shares since that time. The bank is valued at a considerable premium to book, with a P/B ratio of 1.6; while its earnings multiples are low in absolute terms (in the 11-12 range), other large banks such as JPMorgan Chase & Co. (NYSE:JPM) and Citigroup Inc (NYSE:C) might be better values. Billionaire Ken Fisher’s Fisher Asset Management owned over $600 million worth of both JPMorgan Chase and Wells Fargo at the beginning of April (find Fisher’s favorite stocks).

Buffett has maintained a stake of a little over 150 million shares in American Express Company (NYSE:AXP) over the past couple of years. American Express Company (NYSE:AXP) is growing slowly; in the second quarter of 2013, its revenue was up only 2% versus a year earlier with net income up 5%. With trailing and forward P/Es of 18 and 14 respectively, markets seem to pricing in an increase in earnings growth rates over the next few years. GAMCO Investors disclosed ownership of 3.7 million shares of the credit/debit card and travel services company at the end of Q1; that fund is managed by billionaire Mario Gabelli.

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