If there is one person in the world that many investors wouldn’t mind mimicking, it is definitely going to be Warren Buffett. If you read the most recent letter to Berkshire Hathaway shareholders, you really won’t have any illusion as to why this is so.
Buffett originally invested $1.3 billion into Coca-Cola, and that investment has turned into $14 billion over the years. Buffett could also sell $450 million worth of his Gillette investment for $5 billion right now, although it is now part of Procter & Gamble shares that the company has. Buffett could also turn around and sell $1.3 billion worth of his American Express investment that he made a while back, and he would receive over $7 billion for those shares.
Since Warren Buffett has an incredible stock picking track record, it’s obviously understandable that many investors would want to pay close attention to the investment decisions that he makes.
You need to pay close attention when you hear that Warren Buffett is buying something, and make sure you are very careful that the news you are hearing is actually about a company in which Warren Buffett is actually buying.
Why, you may ask?
For instance, Sue Chang of Market Watch put out an article titled “Phillips 66 Gains on Report of Buffett Investment” that offers this information:
“Shares of Phillips 66 (PSX) jumped on Friday in response to a report that billionaire Warren Buffett invested in the refiner which had spun off from ConocoPhillips (COP) earlier this year.”
On a similar note, Steve Gelsie, also of Market Watch, released a similar story titled “Buffett gases Phillips 66” which offers the following news:
“A report that marquee investor Warren Buffett waded into shares of Phillips 66 sparked healthy gains in shares of the refiner on Friday, as energy stocked rallied with the broad equities market. Shares of Phillips 66 jumped 5% after the Berkshire Hathaway founder and chief Buffett told Bloomberg News he reduced his holdings in ConocoPhillips and bought into Phillips 66, a recent newcomer to the S&P 500.”
Do you want to know what the major problem is regarding these updates on Warren Buffett? The truth is that they don’t actually tell you about real investments made by Warren Buffett himself. The AP did get this Buffett report right when they announced this news update:
“Shares of Phillips 66 rose Friday after billionaire Warren Buffett said a Berkshire Hathaway (BRK.A) investment manager purchased shares in the oil refining company. During an interview on Bloomberg television, the chairman and CEO of Berkshire Hathaway Inc. said one of his company’s new investment managers purchased the stock of Phillips 66, which was spun off by ConocoPhillips in May. Buffett didn’t disclose any details of the investment, but he has said that investments made by managers Todd Combs or Ted Weschler tend to be smaller than those he makes. So the Phillips 66 investment likely was worth somewhere between $200 million dollars and $1 billion.”
So you know, there isn’t anything wrong with getting investment advice from Ted Weschler or Todd Combs. They are very successful investors who have incredible track records to their name. This is the reason why Warren Buffett hired them in the first place. So don’t feel like this is any kind of insult to either deputy if someone were to suggest there was a difference between a Buffett investment and a Weschler/Combs investment.
It sad, and just not true, that there are media outlets out there that will report that every single Berkshire Hathaway purchase was made by Warren Buffett. It’s obviously wrong to assume this since Buffett obviously didn’t purchase those shares in Phillips 66. That’s why you need to begin doing extra due diligence if you are making moves based on Berkshire Hathaway’s portfolio thinking that Warren Buffett is making those purchases. It’s important to distinguish between the two, and you’ll need to be able to figure out if Buffett made a trade or one of his assistants made that particular stock purchase. So get used to having to sort through misinformation due to misreporting by the media.