Feed: Warren Buffett - the Warren Buffett Way - AggScore: 45.5

Warren Buffet Diagnosed with Prostate Cancer

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Warren Buffett Prostate Cancer

Warren Buffett has announced that he has been diagnosed with stage I prostate cancer, but that it is not life-threatening.

Warren Buffett in 2005 courtesy Wikipedia

Mr Buffett said he was diagnosed last week

"The good news is that I’ve been told by my doctors that my condition is not remotely life-threatening or even debilitating in any meaningful way,"

Many men have prostate cancer and it is generally not a problem if treatment is started early.

Mr Buffett also wrote

"I feel great -- as if I were in my normal excellent health -- and my energy level is 100%. I will let shareholders know immediately should my health situation change. Eventually, of course, it will; but I believe that day is a long way off."

Dr. Otis Brawley, a prostate cancer expert and CMO for the American Cancer Society says that over 70% of men diagnosed with prostate cancer don't die from the disease.

"The five-year survival rate for stage 1 prostate cancer is over 99 percent,"

he said.

Warren Buffett's cancer is in lowest stage, stage 1, and has not spread outside the prostate.

Dr. Brawley also said that about 50% of the men diagnosed each year with stage 1 prostate cancer are "actually overtreated" and probably don't require any treatment at all.

In another development Warren Buffett has said that he has decided who his successor will be, but that the person doesn't know yet, and neither do we ! We wish Mr Buffett well.

Buffett Buys Tesco Bargain Stocks

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Warren Buffett Ups his Stake in Tesco at Knock-Down Price

A Tesco Store in the UK - Tesco has 30% of market share for groceries

Warren Buffett likes to buy and hold stocks for a long time after doing analyzing the bejeebers out of the company. He also likes stocks that have what he calls a 'wide moat' and probably a drawbridge too. He is not interested in short-term fluctuations in prices, except when they are in his favor.

While visiting Japan in November (not something I would do at the moment- given what the ever-resourceful Japanese have now taken to burying radioactive waste from Fukushima in school playgrounds- ENENEWS ), he said the worldwide financial crisis was throwing up opportunities in European equities,

We bought Tesco earlier. I can think of a dozen euro stocks that are attractive … there are stocks I like and wonderful businesses. I could buy more Tesco if the price came down.

All this explains why he increased his stake in UK retail company Tesco - (the biggest supermarket chain in the UK and one of the biggest in the world - they sell everything from avocados and bananas to TVs to broadband services and insurance - and also lots of petrol (gas if you are in the US)). He bought his shares the day after the share price fell almost 20% - so he does take some notice of stock market fluctuations.

Why did the share price fall 20%? Because Tesco reported Christmas sales that were not very inspiring, but Buffett did his analysis and said "OK in that case I'll have $750 million dollars worth please" . He increased his holding from 3.2% to 5.08%.


Tesco 10 Year Chart with 200 day moving average


Tesco 1 Year Chart with 50 and 200 day moving averages


I trust Warren Buffett's fundamental analysis more than I trust my own. However, given the short-term nature of stock trading I believe the stock price might fall back to around 3 UKP - Mr Buffett bought at 3.2. So I'll hang on and see if I can't get them a bit cheaper (they are at the moment 3.3 - but that's still around 15% lower than they were last week). Long-term they look like the proverbial no-brainer, even in these uncertain economic times, - people still have to eat and put gas in their cars, so Tesco is really not a speculative risky share.

Does Tesco have a good product? Yes. Is it generating profits? Yes. Are the profits increasing at an increasing rate? Yes. Does it have cash? Yes. Is management using the cash to generate shareholder value. Yes. Does it have manageable debt? Yes.

As one analyst put it "All you have to do is find a company with a good product, that makes good increasing profits, has ROE of 15%, manageable debt.....and if you hold, and forget about the short term fear and greed shenanigans, your £5,000 may well grow to £5,000,000 before you retire." If you make 24% a year you double your money every 3 years.

Wide-Moat Companies.

What is a wide-moat company?

Companies with wide moats operate in profitable industries and have long-term structural advantages over the competitition. They have predictable earnings, returns on capital that exceed the cost of capital, and long-term staying power.

The odds are pretty good that the actual intrinsic value of a wide moat company will increase over time, and thus improve shareholder value. So time is on your side with these companies. On the other hand if you buy a company without a wide moat, you are gambling that the stock price will move higher just long enough for you to sell it to someone else (also known as the bigger fool theory - selling to someone who knows even less than you do). That's a very difficult game, best played by professionals with access to lots of information - or chartists with a crystal ball.

With Warren Buffett increasing his stake in Tesco we can be pretty sure that he is confident about its long-term future - if you are young enough this might even be a good time for building up a large stake that will grow over time and you could even re-invest the dividends, thus getting the power of compound interest on your side.

Warrent Buffett's Latest Stock Buys

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Warren Buffett's New Stocks

Video summary of Warren Buffett's current thinking about stocks, the economy and the housing market by Becky Quick of CNBC - scroll dow to see the list fo Warren Buffett's most recent stock picks



Berkshire Hathaway has reported that it has taken new positions in 6, one of which is IBM. Each stake, apart from IBM, is worth around $200 million, and Buffett doesn't deal in such small amounts so they were presumably bought by Todd Combs.

Warren Buffett bought $10.7 billion of IBM common stock this year - 64 million shares at an average price of $170, but he doesn't intend buying any more (unless the price drops).

Todd Combs bought.

DIRECTV (DTV) 4,249,400 shares, now worth $193.9 million.
General Dynamics (GD) 3,064,422 shares, now worth $200.1 million.
Visa 2,291,708 shares, now worth $215.0 million.
CVS Caremark (CVS) 5,661,000 shares, now worth $219.5 million.
Intel (INTC) 9,333,000 shares, now worth $229.9 million.

INCREASED STAKES

Berkshire also increased its stakes in two other stocks:
Dollar General (DG) - tripled stake to 4,497,247 shares.
Wells Fargo (WFC) increased stake by 3% to 361,369,808 shares, now worth almost $9.1 billion

Wells Fargo is a Buffett stake. Dollar General is Combs'.

Today's 13-F reports a 50 percent increase in shares of Torchmark [TMK 42.69 0.44 (+1.04%) ] held by Berkshire. That, however, is the result of a 3 for 2 stock split that became effective on July 5, just after the start of the third quarter. It is not the result of new buying by Berkshire.

DECREASED STAKES

Berkshire also did some selling, with significant reductions for two stocks and the size indicates Buffett took the decision.
Johnson & Johnson (JN) - decreased stake by 12% to 37,446,788 shares
Kraft Foods (KFT) - decreased stake by 10% to 89,746,708 shares

Warren Buffett Buying Stocks

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Warren Buffett's Stock Picks

Warren Buffett has been shopping again. Spending dollarsignr23.9 billion over the third quarter, his biggest spending spree in at least 15 years.

Bloomberg reports that the "Oracle of Omaha" bought almost dollarsignr7 billion of stocks over the quarter at a time when stocks had their worst quarterly performance since 2008.

Buffett's big moves says Bloomberg were "dollarsignr6.9 billion of equities, dollarsignr5 billion for preferred shares and warrants in Bank of America and the acquisition of Lubrizol for about dollarsignr9 billion," according to Bloomberg.

"We're ready to buy lots of things," Buffett said to Bloomberg's Betty Liu on Sept. 30. "If the stock is cheap, we will buy it."

Investing ideas from the Motley Fool
The MF ran a screen on S&P 500 dividend stocks which were undervalued according to the Graham number. The Graham number was developed by Buffett's mentor Benjamin Graham

The Graham Number = Square Root of (22.5) x (TTM Earnings per Share) x (MRQ Book Value per Share). ??This equation assumes that a stock is overvalued if P/E is over 15 or P/BV is over 1.5.

Motley Fool list sorted by potential upside implied by Graham number.

1. NYSE Euronext (NYSE: NYX )
2. ConocoPhillips (NYSE: COP )
3. Best Buy (NYSE: BBY )
4. Sealed Air (NYSE: SEE )
5. BB&T (NYSE: BBT )
6. Raytheon (NYSE: RTN )
7. The Travelers (NYSE: TRV )
8. Invesco (NYSE: IVZ )
9. Carnival (NYSE: CCL )
10. Chevron (NYSE: CVX )

Warren Buffett Charlie Rose Interview

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Warren Buffett interviewed by Charlie Rose

Warren Buffett has been buying stocks recently that he considers are on sale. Personally I think he's a bit early, and yes I do not have dollarsignr50 billion to my name, but don't forget Mr Buffett was six months too early last time he was buying stocks back in October 2008. So maybe he's too early this time too. Certainly with Fannie and Freddie starting lawsuits against a bunch of banks there may be more stock market pain yet to come.

Warren Buffett has also been talking to Charlie Rose - here is the interview (51 minutes long so you may wish to get a coffee first)


What Shares Has Warren Buffett Been Buying?

Berkshire Hathaway increased its stake in Wells Fargo, buying a further 9.7 million shares in the US's biggest mortgage lender up until the end of June, it now has a stake of 2.8%. It further increased its stake on Monday 8 August as the S+P was plunging.

Buffett Backs Bank of America

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Warren Buffett Gives Bank of America What it Doesn't Need

Warren Buffett strikes again with a $5 billion investment in Bank of America, put together to guarantee him a profit. This despite the fact that BofA said just 2 weeks ago that they did not need any cash. Warren Buffett clearly has hypnotic powers!

Berkshire Hathaway will receive 50,000 perpetual preferred shares from the deal, which has a 6% annual dividend payable quarterly, compared to what you or I would get i.e. 0.5%, which means that Berkshire Hathaway will be getting around $300 million from Bank of America each year, which the number-crunchers at NYT have worked out is $821,917.81 a day.

Berkshire Hathaway will also get 10-year warrants that it will be able to convert into 700 million common shares in Bank of America, at a strike price of $7.142857, which at the moment would represent a paper profit of $392 million on the warrants.

Mr Buffett also bailed out Goldman Sachs back in 2008 but on harsher terms as it was right in the middle of the financial crisis.

So does this mean that the current slump is over? Bank of America shares rose 26% at one point on the news but have fallen back to only 9%. Is this a vote of confidence in Bank of America and the economy in general by Warren Buffett ? No doubt, but plenty of people have pointed out that it is odd that Bank of America should accept Warren Buffett's terms when they had previously stated they did not need any cash. This leads people to think that the economy may in fact be in worse state than we are led to belive.

As a result Bank of America's share price may soon be lower than it was before the deal. It should be remembered that Warren Buffet is a long-term investor (most of the time) and that he did not call the bottom of the financial crisis, he was in fact six months early as the markets only bottomed out in March 2009.

"BofA may be a good value here but that doesn't mean it's a great stock for average investors," said the President of Springer Financial Advisors. "Buffett knows that the government is not going to let BofA fail. So he's got a quasi-government insured CD with a 6% yield and upside potential."

BofA is now in possession of $5 billion it didn't have before, but there are still legal risks linked with bad mortgage assets that not even Warren Buffett can cause to disappear.

BofA will probably be a slow-growth stock for a long time. Banks no longer churn out ridiculously strong earnings due to taking exorbitant risks. Investors would be better advised to lok at Wells Fargo and JPMorgan Chase that yield 2% and 2.9% respectively.

Buffett's Hidden Agenda on Taxes

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Warren Buffett - The Other Opinion of his View on Taxes

This is a blog about Warren Buffett, but in the interest of impartiality here is James Altucher's opinion of Warren Buffett's view on taxes. James Altucher has written a book about Warren Buffett, so he must have some insight into his thinking (you would hope).

Here is his highly cynical view of what Warren Buffett is really saying when he says to lower taxes - Waren Buffett's 'hidden agenda' as he puts it. Personally I find Mr Altucher's analysis a bit far-fetched but who knows, he could be right. Roll the video below !


One inconsistency in Altucher's argument is that he says that compared to Warren Buffett he is a "very poor man" and he doesn't like Buffett telling him he should pay more taxes. But Buffett only wants people earning over $1 million to pay more taxes (around 250,000 households in the US i.e. a very small proportion).

Now if James Altucher is earning over $1 million then he may be poor compared to Buffett (who isn't ?) but he is rolling in money compared to everyone else! So pleading poverty and telling Buffett to mind his own business is not really on.

My cynical view of Altucher's hidden agenda ? He just wants to sell more books and get his face on TV more.

Warren Buffett onTaxes

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Warren Buffett - How Much Tax does Warren Buffett Pay?

Well, not enough, according to the Oracle himself. His federal tax rate last year was $6,938,744 which included income tax and payroll taxes paid him and on his behalf. That sounds like a lot but it was only 17.4% which is a lower rate than the 20 other people who work for him in his office, who presumably are not billionaires and whose tax rate averaged 36%. Such is the crazy US tax system.

In a New York Times article Warren Buffett has urged U.S. lawmakers to raise taxes on Americans who earn over $1 million and says this would not adversely affect investments or jobs.

Like in the UK where David Cameron has famously said "we are all in this together" David Cameron and most of his cabinet are millionaires, in the US the leaders have asked for 'shared sacrifice.' "But" says Warren Buffett "they spared me." and his mega-rich friends too.

He also points out that some investment managers are taxed just 15% on billions of dollars of income, because they can classify their income as “carried interest,” while the middle classes are taxed up to 25%. Legislators in Washington feel compelled to protect the rich, as if they were "spotted owls or some other endangered species. It’s nice to have friends in high places" Buffet added.

Tax rates for the rich were in fact "far higher" in the 1980s and 1990s, yet almost 40 million jobs were added over the period from 1980 to 2000.

"You know what's happened since then: lower tax rates and far lower job creation," Buffett said. "People invest to make money, and potential taxes have never scared them off."

Back in 1992, the I.R.S. started compiling data from the tax returns of the 400 Americans with the largest income.

"In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent. "

In addition

"you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.) "

How many people would be affected if the US government listened to Warren Buffett's advice ?

There were 236,883 households making over than $1 million in 2009, with 8,274 making over $10 million, which out of a population of over 250 million is really not a lot, which makes you wonder just why the US government and some US voters seem so intent on protecting them.

Warren Buffett talking on July 8 about jobs

Warren Buffett on Sokol's Trades

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Warren Buffett - Tells CNBC What He Really Thought of David Sokol's Actions

Warren Buffet has come in for a lot criticism for his reaction to David Sokol's trading in Lubrizol shares just before Berkshire Hathaway bought the company. A lot of people thought that Buffett had been a bit soft on Sokol and that he was not clear about whether Sokol had done anything wrong or not. So he has been on CNBC to try and clear a few things up.

You can see the CNBC video below - but in brief this is what Warren Buffett said about David Sokol's trades.

Well, I thought they were wrong. (There is a transcript of everything that happened at the annual meeting on the Berkshire Hathaway Web site.)
I handed him his resignation.
Our lawyers called the head of enforcement at the SEC and laid out the facts - it was a big mistake.
Whether it was illegal is another question, for other people to decide.

People-- feel that I did not show anger. But - I did not make any attempt to talk him into staying this time.
We laid out the facts on what we knew at the time about this trading, which I think anybody reading the press release, would think, this is really something that shouldn't have happened.
Obviously --in terms of public reaction, I should have expressed some anger. But I thought the facts spoke for themselves.

I wish I had (asked him more) because it would've saved Berkshire andf him a lot of trouble.
But when he ... said ... `Well, I've owned the stock and I've followed it and it looks like our kind of company.' ... I would not have assumed that (he) bought a lot of stock a few days before. If I'd simply asked the question, I would've saved Dave and us a lot of trouble.

(Regarding) violating Berkshire Hathaway policies, our audit committee report is on our Web site and --I don't think anybody could read it and look at the acts and not conclude that the policies were violated.

To my knowledge, Dave (Sokol) did all this in his own name. So it was inexplicable and inexcusable and I really come down that way.

I would say that Dave probably thought that that press release was ruthless.
The rest of the world may not have thought of it but we were laying out a case with definitive facts.
We called the head of the enforcement division of the SEC with those facts. He was gone, he was gone under circumstances which gave him the least compensation and no extra,
So I think he probably felt it was pretty ruthless.
I can assure you that in terms of the board meeting - I think the board felt we were taking prompt and decisive action --but again, I wrote the press release so if it came off badly then it's my fault.

So it's pretty clear that Warren Buffett was not a happy bunny and that David Sokol resigned under a cloud. Click here to see David Sokol's version of events - David Sokol on CNBC

Warren Buffett Sued Over Sokol

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Warren Buffett Sued by Shareholder

Warren Buffett's image has always been one of absolute probity but is seems to have been somewhat tarnished by the recent Sokol-gate affair, when David Sokol advised the Oracle of Omaha to take a look at Lubrizol even though he himself already had shares in the company.

This decision by Sokol seemed odd to many and 21 out of 23 top U.S. investment bankers polled at the Global Mergers and Acquisitions Summit organised by Reuters have stated that in their opinion Sokol should not have traded in Lubrizol. It now turns out that Warren Buffett and the Board of Directors of Berkshire Hathaway are being sued by over presumed trading in the stock of a company that was later acquired by Berkshire, by David Sokol once considered to be candidate for Buffett's position.

David Sokol was also named in the lawsuit - Kirby v. Sokol et al, Delaware Chancery Court, No. 6392. He resigned after revealing he had bought shares in Lubrizol before suggesting the company to Berkshire Hathaway as a possible acquisition target.

The lawsuit has been filed by Berkshire Hathaway shareholder Mason Kirby and it calls upon Sokol to relinquish any improper gains to Berkshire. It also calls for Buffett and other directors to compensate Berkshire for the damage caused by them to the company's reputation and goodwill.

The affair has raised questionas to whether Sokol might be charged with insider trading, and also about the 80-year-old Buffett's oversight of Berkshire, and whether controls should be tightened.

The $9 billion acquisition of Lubrizoal was announced on March 14, immediately increasing the value of Sokol's own stake by $3 million.

Tuesday's lawsuit said "Sokol's actions and Buffett's inaction significantly impaired the reputation of Berkshire and constituted breaches of their duty of loyalty to Berkshire and its shareholders."

Sokol has said his Lubrizol trades were not unethical and both Sokol and Buffett have said that in their opinion Sokol did nothing unlawful.

David Sokol Explains his Resignation

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Warren Buffett - Video Reaction to David Sokol's Resignation

UPDATE : David Sokol, Warren Buffett and Berkshire Hathaway are being sued by a Berkshire Hathaway shareholder - see details here David Sokol

David Sokol and Warren Buffett

David Sokol has just been on CNBC for nearly half an hour non-stop (no ad. breaks !) which has got to be a first in itself. 

For Warren Buffett's CNBC interview re. David Sokol's trades see - Warren Buffett CNBC Interview

Harvey Pitt has just said on CNBC that it was "terrible" and a failure in fiduciary duties, and he should have realized he was 'dis-serving' the people he worked for.The panel was very scathing about Mr Sokol's behavior.

Joe Kernan on CNBC just made a comment that the people who sold the shares to Mr Sokol were not privy to the same information that Mr Sokol was.

In yesterday's interview with CNBC Mr Sokol said

Re. his resignation from Berkshire Hathaway:-
He has been thinking about it for around 2 and a half years
He offered his resignation twice before but was talken out of it by Warren Buffett
He doesn't see Warren Buffett going anywhere soon
He wants to set up his own sort of company - a mini-Berkshire Hathaway
NetJets can manage fine without him
Re. Lubrizol shares
He doesn't think he did anything wrong
He bought shares in Lubrizol for the 2nd time on Jan 5, 6 and 7
Spoke to Warren Buffett about Lubrizol for the first time on Jan. 14
Did not think Warren Buffett seemed very interested in Lubrizol
Once negotations started he didn't think it would be appropriate to sell the shares
Warren Buffett did not react in any particular way when he was told of the quantities of the shares purchased
Timing of his regination has nothing to do with the share purchase
He was surprised by the speed of the Lubrizol transaction

Here's a video showing what then guys at Breakout think

David Sokol, seen by many as one of the main candidates to succeed Warren Buffett at the head of Berkshire Hathaway, has surprised everybody (including Warren Buffett himself) by resigning after helping negotiate the purchase of a company whose shares he had bought. Sokol, bought about 96,000 shares in Lubrizol Corp. before recommending it as a takeover target, Warren Buffett said. Buffett said he didn't ask Sokol to resign and that Sokol's stock purchases were perfectly legal. Lubrizol, a maker of engine lubricants, was bought this month by Berkshire for about $9 billion.

It would appear that, according to Daniel Genter, President of RNC Genter Capital Management in Los Angeles,

“The SEC is going to at that deal to check for insider buying and selling, so if there’s an issue the time to clean it up is now.”

Berkshire Class B shares fell 3% to $82.90 in extended trading after the announcement. David Sokol was chairman of Berkshire’s MidAmerican Energy Holdings and its roofing unit Johns Manville, and CEO of NetJets Inc., Berkshire’s luxury-flight subsidiary.

Sokol may have realized a profit of around $3 million from the 96,060 Lubrizol shares he bought on Jan. 5, 6 and 7, less than 2 weeks before suggesting that Berkshire buy the company.

Lawrence G. McDonald, President of McDonald Advisory Group said

“It’s just a classic case of someone not fitting into that Buffett culture. That’s the type of thing you might do at another hedge fund, but you don’t do it at Berkshire.”

Sokol joined Berkshire in 2000 when he sold MidAmerican to Buffett for about $9 billion.

According to David Kass, Professor at the Robert H. Smith School of Business.

“He was the heir apparent. The exercise of his recommending Lubrizol to Warren Buffett was like a CEO in training.”

Sokol told Buffett he was a shareholder in Lubrizol, when they first discussed a possible deal, according to a statement released yesterday.

“It was a passing remark and I did not ask him about the date of his purchase or the extent of his holdings,” Warren Buffett said. He learned about the size and dates of the purchases “shortly before I left for Asia on March 19.”

Berkshire has said it has four candidates to take over from Buffett as CEO, but has not publicly identified them. Many investors think Sokol was the most likely successor. On March 23, Buffett said in India that Ajit Jain, would win the support of directors if he decided to seek the top job.

Buffett also said that he hasn’t asked for Sokol’s resignation and it came as a surprise. Berkshire is “far more valuable today” because of Sokol’s service, he said.

Jacob Frenkel, attorney at Shulman Rogers Gandal Pordy & Ecker and former SEC lawyer said

“If all we have here are purchases before making a recommendation, and the decision to pursue an acquisition doesn’t commence until after the transactions are completed, that wouldn’t satisfy the definition of insider trading.”

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4 Tech Stocks for Warren Buffett ?

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Tech Stocks for Warren Buffett ?

Warren Buffett - 4 Tech Stocks Warren Buffett Might Buy

What techk stocks would Warren Buffett be interested in ?

Warren Buffett is not renowned for being an investor in technology stocks and famously missed out on the dotcom boom and bust back in 1999-2000. According to Investment Underground over at Seeking Alpha there are, however, tech stocks that he may be interested in.

They looked into tech companies with

"a market of over $2 billion, a dividend yield higher than 1%, returns on equity over 15%, a current ratio of over 1, and price to free cash flow ratio of under 15"

and these are the four companies that passed their test. To see the whole article with details of their reasoning (which includes 2 companies that Warren Buffett might not buy) click here SeekingAlpha -

• Broadridge Financial Solutions (BR): they provide investor communication, securities processing and clearing and outsourcing solutions to the financial services industry.
• China Mobile ADR (CHL): China Mobile has 575 million subscribers, making it the largest mobile phone carrier in the world.
• Millicom International Cellular (MICC): a mobile carrier focused on emerging markets, the market leader in six of the thirteen countries in which it has wireless service: Chad, El Salvador, Paraguay, Honduras, Guatemala, and the Democratic Republic of the Congo.
• Microsoft (MSFT): the most likely candidate to be added to the Berkshire profile.

To see which stocks Warren Buffett actually has in his portfolio see here Warren Buffett's Stock Holdings

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Possible Warren Buffett Stocks 2011

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Warren Buffett - Stocks Warren Buffet Might Like for 2011

Warren Buffett's investing strategy has made him one of the richest people in the world. His strategy is simple enough, buy stocks in consistently profitable companies, re-invest the dividends, and wait. The power of compound interest does the rest. You just need to be patient, as Warren Buffett likes to say "the stock market is a place for transferring money from the impatient to the patient".

There are plenty of people who like to criticize Warren Buffett's investing strategy, but most of them have not made billions from investing.

In an interesting experiment for 2011 investments, stock market analysts at Credit Suisse have put together a portfolio of holdings for 2011 that would meet Warren Buffett's investment philosophies.

They researched companies with profit margins that improved over the past 2 years, with an above-average return on equity, with low debt and a competent management team. Finally, they made sure the companies did not have any ongoing investigations or accounting issues.

This resulted in a portfolio of 22 stocks that are capable of delivering good long-term returns.

Some of these companies are too small for Berkshire Hathaway to invest in, but they are fine for individual investors.

CONSUMER STAPLES

Boston Beer (SAM)Market value: $1.3B
ROE: 27%
Long-term debt-to-equity ratio: 0% / Total debt: $0
CEO tenure: 9 years
1-year total return: 108 %

Hormel Foods (HRL)

Market value: $6.9B
ROE: 18 %
Long-term debt-to-equity ratio: 0 % / Total debt: $350 million
CEO tenure: 4 years
1-year total return: 35%

CONSUMER DISCRETIONARY

TJX Cos. (TJX)
Market value: $17.6B
ROE: 46 %
Long-term debt-to-equity ratio: 25% / Total debt: $791 million
CEO tenure: About 4 years
1-year total return: 21 %

American Public Education (APEI)

Market value: $0.7B
Return on equity: 33.6 %
Long-term debt-to-equity ratio: 0 % / Total debt: $0
CEO tenure: 6 years
1-year total return: 9 %

HEALTH CARE

Almost Family (AFAM)
Market value: $0.3B
Return on equity: 19 %
Long-term debt-to-equity ratio: 1 % / Total debt: $3 million
CEO tenure: 18 years
1-year total return: flat
Baby boomers need more health care

Humana (HUM)

Market value: $9.3B
ROE: 20 %
Long-term debt-to-equity ratio: 24 % / Total debt: $2 billion
CEO tenure: 10 years
1-year total return: 26 %
Insurers generate lots of cash - . That's why Warren Buffett buys them - Humana recently raised its 2011 earnings forecast.

Sources: Credit Suisse, Standard & Poor's Capital IQ, Morningstar

Other (non Warren Buffett) stock picks for 2011 - newspaper stock picks for 2011
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Warren Buffett Latest Stock Holdings

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Warren Buffett's Latest Stock Holdings

Warren Buffett filed his quarterly Berkshire Hathaway stock holdings form with the SEC on Nov. 15, 2010. It revealed that at September 30, 2010, Warren Buffett's funds had a value of $48.56 billion. You can check out the whole SEC filing in the links.

The sector allocations were as follows:

Financials: 40.9%
Consumer Goods: 38.9 %
Consumer Services: 6.7%
Health Care: 6.1%
Oil & Gas: 3.5%
Industrials: 2.9%
Utilities: 0.3%

Top positions closed out by Warren Buffett: KMX, RSG, HD, IRM, NRG
Top positions initiated by Warren Buffett: BX
Top positions decreased by Warren Buffett: MCO, PG, NLC, FISV, IR, NKE, CMCSK
Top positions increased by Warren Buffett: WFC, JNJ

Warren Buffett's top stock holdings at September 30, 2010.

American Express over 151.6 million shares, unchanged.
Bank of America Corp. 5 million shares; unchanged.
Bank of New York Mellon Corp - NEW - at 1,992,759 shares.
Becton Dickinson & Co. 1.889 million shares, unchanged
Coca Cola Co. 200 million shares, unchanged .
Comcast Corporation reduced to only 186,897 shares - used to be 12 million before.
Comdisco Holdings roughly 1.5 million shares, unchanged.
ConocoPhillips is roughly 29.1 million shares, unchanged
Costco Wholesale 4,333,363 Shares, unchanged.
Exxon Mobil Corp. 421,800 shares; unchanged.
Fiserv, Inc. is already down from 4.4 to 3.91+ million shares,
Gannett Co. 1.74 million, unchanged
General Electric Corp. 7.777 million shares; unchanged
GlaxoSmithKline 1.51 million shares, unchanged.
Ingersoll-Rand 636,600 shares, down again was over 7.78 million over a year ago.
Johnson & Johnson increased to over 42.62 million shares.
Kraft Foods is 105.21 million, unchanged
Lowe’s Companies 6.5 million shares, unchanged.
M&T Bank Corp. is 5.363 million, unchanged
Moody’s Corp. down again at 28.87+ million shares
Nalco Holding 6,142,300 shares down from 9.15 million
Nestle ADR 3.4 million shares, unchanged.
Nike Inc. down to 3,642,929 shares from 7.641 million.
Procter & Gamble down to over 76.7 million shares from over 78 million

Sanofi-Aventis unchanged
Torchmark Corp. unchanged
US Bancorp unchanged
USG Corp. unchanged
United Parcel Service unchanged
Wal-Mart Stores Inc. unchanged
Washington Post unchanged
Wells Fargo & Co. up to 336.4+ million shares
Wesco Financial Corp. unchanged

Home Depot Inc. - eliminated
Republic Services Inc. - eliminated
NRG Energy Inc. - eliminated .
Iron Mountain eliminated

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