10 Stocks You Can Buy Cheaper Than Buffett
Warren Buffett, at the age of 92, continues to exhibit a keen intellect, making him a formidable figure in the world of investing. An example of his remarkable acumen is evident in his shrewd investments in Japanese trading firms, which yielded returns exceeding 100% over a span of three years. It was unexpected that Japanese stocks would experience such a significant resurgence after a three-decade lull. Additionally, he demonstrated foresight by selling numerous bank stocks before the banking crisis unfolded in March of this year. The Oracle of Omaha rightfully earns admiration and respect for his remarkable achievements.
Investors closely monitor Buffett's investment decisions, as any stock he purchases receives a tacit endorsement. Even if his deputies recommend the stocks, it is presumed that Buffett himself was aware of them. It is believed that he conducts thorough due diligence and ensures that the stocks meet his rigorous criteria. This creates an opportunity for investors to piggyback on his investments. However, there are also instances where Buffett acquired stocks many years ago at considerably lower prices and continues to hold onto them. In such cases, it may not be advisable for us to buy those stocks, as the prices have risen too much.
In this discussion, our attention will be directed towards stocks that are currently trading at prices lower than the ones Buffett paid in recent years. By considering these stocks as potential investments, we can benefit from a greater margin of safety.
#1 Kraft Heinz (KHC)
Average Buy Price: $77.86
Current Price: $36.62
Change: -53%
Kraft Heinz, the company renowned for its iconic Kraft cheese and Heinz ketchup, also owns numerous other popular consumer brands. Buffett always see strong consumer brands as moats so it isn't surprising Berkshire Hathaway and 3G Capital acquired stakes and pushed Kraft and Heinz to merge in 2015. However in 2019, Warren Buffett acknowledged that he may have overpaid for Kraft Heinz but expressed his intention to hold onto the investment, believing that these strong brands will continue to succeed, resulting in higher prices over the next decade. Currently, Kraft Heinz holds the seventh-largest position in Berkshire Hathaway's public investment portfolio, accounting for approximately 3% of its holdings.
#2 Paramount Global (PARA)
Purchase Price Average: $31.64
Current Price: $15.67
Percentage Change: -51%
Paramount Global, a media conglomerate, boasts ownership of television networks, streaming services, and owns one of the "Big Five" film studios, Paramount Pictures. The company is responsible for producing blockbuster franchises like Top Gun, Mission Impossible, and Transformers. Berkshire Hathaway made its initial investment in Paramount in May 2022 and subsequently increased its holdings in November 2022. Currently, Paramount Global constitutes approximately 0.4% of Berkshire Hathaway's investment portfolio. However, the stock has experienced a significant decline of 51% from the average purchase price, highlighting the intense competition in the industry.
#3 Ally Financial (ALLY)
Average Buy Price: $40.61
Current Price: $27.80
Change: -32%
Ally Financial, although not classified as a traditional bank, has a diverse range of financial services under its umbrella. This includes owning an online bank, a stockbroking platform, and providing car and housing loans. Berkshire Hathaway initiated its investment in Ally Financial in the first quarter of 2022, and in the second quarter, it significantly increased its holdings, more than doubling its stake. However, by the end of 2022 and the beginning of 2023, Berkshire Hathaway trimmed approximately 3% of its shares. Presently, it still retains a position valued at $823 million, which accounts for approximately 0.2% of Berkshire Hathaway's investment portfolio.
#4 Celanese (CE)
Average Buy Price: $149.22
Current Price: $108.82
Change: -27%
Celanese, a company primarily known within the chemicals industry, specializes in producing advanced engineering materials. Berkshire Hathaway acquired shares of Celanese in the first quarter of 2022, along with several other stocks mentioned in this list. Over the subsequent two quarters, Berkshire Hathaway increased its positions in Celanese. However, it is worth noting that in the first quarter of 2023, Berkshire Hathaway reduced its position by approximately 9.2%. Despite this adjustment, Berkshire Hathaway still has a position valued at over $1 billion, representing approximately 0.3% of its overall portfolio.
#5 Nu Holdings (NU)
Average Buy Price: $9.38
Current Price: $7.68
Change: -18%
Nu Holdings, a Brazilian digital bank, attracted an investment from Berkshire Hathaway in the fourth quarter of 2021, at an estimated price of $9.38 per share. Since then, Berkshire Hathaway has neither added nor sold any positions in the company. Presently, the investment is valued at $808 million, accounting for approximately 0.2% of Berkshire Hathaway's investment portfolio.