Warren Buffett is one of the greatest investors of all time. He has made a fortune for himself and his investors buying and selling stocks during the past 60 years.
Buffett has been so successful because he’s been willing to buy when other investors have been running scared.
Indeed, Warren Buffett’s investment strategy can be summed up with one of his most famous quotes, “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.“
It is highly likely that Buffett has taken advantage of the market volatility over the past few weeks. The question is, which companies has he been buying in the market crash?
Warren Buffett’s favourite companies
We can use the advice Warren Buffett has issued in the past to get some idea of the sorts of companies he might have been buying recently.
For example, we know Buffett likes consumer goods giant Kraft Heinz. Kraft has tried to buy Unilever in the past, which could be a sign that this is the sort of business Warren Buffett would back.
As well as Unilever, there’s also a good chance Buffett might be interested in Reckitt Benckiser. These two companies have similar traits.
Other companies Warren Buffett might like include banking giant Lloyds. Since the financial crisis, Buffett has spent tens of billions of dollars increasing his holdings of bank stocks. He likes banks that are well-capitalised and earn good returns on tangible assets.
According to its latest financial reports, Lloyds has a capital ratio in the mid-teens, well above the minimum. It has also reported one of the highest returns on assets of European banks. The fact that the bank was on track to support a high single-digit dividend yield this year also stands testament to its quality.
A company that’s been a mainstay of Buffett’s portfolio since the 1980s is Coca-Cola. A similar company for UK investors could be Britvic or Fevertree. Both of these companies have good reputations and excellent portfolios of consumer brands.
Warren Buffett likes companies that can capture, what he calls “share of mind.” As one of the most recognisable mixer brands in the UK, Fevertree certainly meets this criterion.
The bottom line
These companies give us some idea of the kinds of businesses Warren Buffett would buy in the current market crash. He likes to buy highly profitable companies that have a definite competitive advantage, at low prices.
Usually, these businesses command a premium valuation multiple. However, recently, the stock market crash has sent these stocks plunging.
While it might be difficult to click “buy” with the prospect of further market declines on the horizon, now could be the time to follow Warren Buffett’s advice. It could be an excellent time to be greedy, while other investors are fearful and these excellent companies are at low prices.
Rupert Hargreaves owns shares of and has recommended Unilever. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.