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Wednesday, September 13, 2006

The Market's Love of Warren Buffett and Berkshire Hathaway

The world just can’t get enough of Warren Buffett. If you could draw a comparison to an old-timer rock band that just seems to keep on going to an old-timer stock market rock star, Warren Buffett is The Rolling Stones.

Last night Cramer on MAD MONEY covered USG (USG) as a Warren Buffett stock. In all honesty, pointing this out is not anything new and the details of Berkshire Hathaway’s willingness to buy the rest of the rights offering has been known for months. But that just doesn’t matter. USG has been getting most (or maybe all) of its old asbestos woes behind the company, and that is why the stock has made a meteoric rise from well under $10.00 a few years ago to over $120.00 before it fell off the cliff back to under $50.00 with other companies related to the housing sector. None of that matters, though. The market has been giving interest all of a sudden to the sector even as the rearview mirror watchers only see bad things.

Smart Money Magazine has an article that can be accessed online that points out several other stocks that Warren Buffet would also buy. Even though the market isn’t cheap by Warren Buffet standards, this article has identified several values that would fit a search that Buffet would run. It cannot be of any shock nor of any surprise that Buffet’s own Berkshire Hathaway (BRK/A and BRK/B) is on the list. The hedge fund manager (Whitney Tilson of T2 partners) that was sourced, showed a belief that Berkshire Hathaway itself was undervalued by some 30%. That is even with a market cap of $143 Billion and with the stock essentially back up close to all-time highs.

The article also points out HSBC Holdings (HBC), American Express (AXP), United Parcel Service (UPS), Scotts-Miracle Grow (SMG), Mohawk Industries (MHK), and Wal-Mart (WMT) as stocks that fit the bill for the Oracle of Omaha.

Oddly enough, this list does not include any new power or utility company names and Mr. Buffett has in the fairly-recent past expressed interest in owning utility companies. He even went as far as saying that one $10 Billion acquisition is easier to manage than ten $1 Billion acquisitions.

Regardless of old news, new news, or even unrelated news, the street still loves Warren Buffett. Here is a list of Berkshire Hathaway subsidiaries, and below is the list of Berkshire Hathaway public company stock investments as of June 30, 2006..

As of June 30, 2006, here is a list of the number of shares in public companies that Berkshire Hathaway owned (please be advised that some of the above are already on the list in the article and some of these holdings have already changed):

COMPANY # of SHARES

American Express 151,610,700

American Standard 11,062,700

Ameriprise Financial 23,922,137

Anheuser Busch 43,528,052

Block H & R 11,386,500

Coca Cola 200,000,000

Comcast-A 11,110,200

Comdisco Holding Co. 1,523,446

ConocoPhillips 17,938,100

Costco Wholesale Corp. 5,254,000

First Data Corp 10,000,000

Gannett Inc. 3,447,600

General Electric 7,777,900

Home Depot Inc. 4,181,000

Iron Mountain Inc. 5,024,700

Johnson & Johnson 1,970,000

Lowes Companies Inc. 390,000

M&T Bank Corporation 6,708,760

Moody's 48,000,000

Nike Inc. 2,474,600

OSI Restaurant 1,818,800

Petrochina Co LTD 659,000

Pier 1 Imports Inc. 3,290,000

Proctor & Gamble Co. 100,000,000

Sanofi Adventis 488,500

Sealed Air Corp 677,700

Servicemaster Co. 3,998,000

Sun Trusts Banks 3,204,600

Torchmark Corp. 2,823,879

Tyco International 10,000,000

USG Corporation 6,500,000

United Parcel Service 1,429,200

Wal-Mart Stores 19,944,300

Washington Post Co. 1,727,765

Wells Fargo & Co. 95,320,800

Wesco Financial Corp. 5,703,087


We know that Mr. Buffett will not run Berkshire Hathaway one day, and he has already said there is more than one person already at the company capable of running the show when he is not there. Regardless, if all the market participants could magically vote for one market pundit to become immortal you know they would vote for Warren Buffett to be that choice.

Jon C. Ogg
September 13, 2006
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