Warren Buffett is the world’s greatest investor. Over the past seven decades, he has turned an initial investment of $100,000 into a conglomerate with over $700bn of assets.
Considering this track record, it is no surprise that many investors want to copy the billionaire’s approach, this author included. So there are four strategies I am using to copy Buffett’s investment style.
Investing alongside Buffett
One strategy I am using to invest alongside the billionaire is simple. I own shares in his US holding company, Berkshire Hathaway.
This company has two share classes. The A Shares, which are worth over $400,000 each and are majority-owned by Buffett himself. Then there are the B Shares. These are a more affordable $285 apiece.
I own the Berkshire Hathaway B Shares, and I would be happy to buy more as I think this is the best way to invest alongside the billionaire investor.
However, there are other ways to invest alongside Buffett without acquiring Berkshire shares. One way is to copy the investments he owns.
His largest holding in the portfolio is Apple. The technology company is highly regarded worldwide for its slick products and hefty research and development spending. I would buy shares in this business for exposure to its world-beating brand and growth potential.
Another stock in Berkshire’s portfolio I would buy to invest alongside Buffett is Coca-Cola. Shares in the drinks company have been a staple in Buffett’s portfolio since the 1980s.
One downside of using this stock-picking approach is that it requires time and effort to analyze these businesses. Some investors may also not be comfortable owing US securities.
The UK approach
One stock I own in my portfolio is the Personal Assets Trust. This investment trust owns a portfolio of stocks and shares, including Berkshire Hathaway when I bought in. While PAT has since sold out of its position, at the time it was a way for me to invest alongside Buffett, without having to get caught up in some of the challenges of owning US equities.
The downside of using this approach was the fact that Personal Assets owns other stocks. So there was a risk that investors got caught out by poor stock picks from the trust’s managers. Still, I would be happy to buy more of the shares.
The final approach I would use to invest alongside Buffett is to buy the CFP SDL UK Buffettology Fund. Another UK-based fund, it seeks to invest using the same principles as Buffett. So far, the trust has achieved impressive returns using this approach, although investors should never use past performance to guide future potential.
These are the strategies I would use to invest alongside Warren Buffett. They all provide some level of exposure to the billionaire and his investment style, although they all also have their own benefits and drawbacks.
