Warren Buffett's Management Secrets PDF Free Download

Even in today's economic climate, when so many investors and major companies are failing, Warren Buffett continues to be successful in all aspects of his lif. The Warren Buffett Archive is the world’s largest collection of Buffett speaking about business, investing, money and life. 28 full Berkshire Hathaway annual meetings, going back to 1994, with a highlight reel for each year - 130 hours of searchable video, synchronized to 2800 pages of transcripts - 500 video clips covering scores of subjects - CNBC interviews, a Buffett.

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Summary

Pdf
  • The two value investors have similar approaches to stock picking.

Legendary investor Warren Buffett (Trades, Portfolio), head of Berkshire Hathaway BRK.A (BRK.A, Financial)(BRK.B, Financial), is known for his preference of investing in wonderful companies at fair prices that have strong competitive advantages and predictable businesses for the long term. This strategy has contributed to his strong performance of an average annual return of 20% since 1965.

Comparatively, Wedgewood Partners’ David Rolfe (Trades, Portfolio) approaches potential investments with the mindset of a business owner, striving to generate significant long-term wealth by analyzing a handful of undervalued companies that have a dominant product or service, consistent earnings, revenue and dividend growth, are highly profitable and have strong management teams.

Warren Buffett' S Management Secrets Pdf Free Download Pdf

Since the two gurus take similar approaches to investing, they have several holdings in common.

According to the Aggregated Portfolio, a Premium GuruFocus feature, the veteran value investors both have positions in Apple AAPL Inc. (AAPL, Financial), Verizon Communications VZ Inc. (VZ, Financial), Visa Inc. V (V, Financial), U.S. Bancorp TBBK (USB, Financial) and The Kraft Heinz Co. (KHC, Financial) as of the third quarter.

Apple

Rolfe reduced his position in Apple (AAPL, Financial) by 1.11% to 375,367 shares during the quarter, while Buffett left his stake unchanged with 887.14 million shares. They have a combined equity portfolio weight of 50.27% in the stock.

The Cupertino, California-based tech giant, which is known for the iPhone and Mac computer, has a $2.73 trillion market cap; its shares were trading around $166.21 on Monday with a price-earnings ratio of 29.57, a price-book ratio of 43.28 and a price-sales ratio of 7.68.

The GF Value Line VALU suggests the stock is significantly overvalued currently based on historical ratios, past performance and future earnings projections.

Apple’s financial strength was rated 5 out of 10 by GuruFocus. Although the company has issued new long-term debt in recent years, it is still at a manageable level as a result of a comfortable level of interest coverage. The robust Altman Z-Score of 7.68 indicates the company is in good standing. The return on invested capital also eclipses the weighted average cost of capital by a wide margin, meaning value is being created as the company grows.

The company’s profitability scored a 9 out of 10 rating. Apple is supported by strong margins and returns on equity, assets and capital that outperform a majority of competitors, a high Piotroski F-Score of 7 out of 9, meaning healthy business conditions, and consistent earnings and revenue growth. It also has a predictability rank of five out of five stars. According to GuruFocus, companies with this rank return an average of 12.1% annually over a 10-year period.

GuruFocus says Buffett has gained an estimated 334.42% on his investment since the first quarter of 2016, while Rolfe has gained 83.50% so far.

Of the gurus invested in Apple, Buffett has the largest stake with 5.41% of its outstanding shares. Ken Fisher (Trades, Portfolio), Pioneer Investments, Spiros Segalas (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Elfun Trusts (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies and Tom Gayner (Trades, Portfolio) also have significant positions in the stock.

Verizon Communications

Both gurus left their holdings in Verizon Communications (VZ, Financial) unchanged. Buffett holds 158.8 million shares, while Karr has 16,000 shares. The combined equity portfolio weight is 3.04%.

The telecommunications company, which is headquartered in New York, has a market cap of $215.22 billion; its shares were trading around $51.10 on Monday with a price-earnings ratio of 9.62, a price-book ratio of 2.76 and a price-sales ratio of 1.58.

According to the GF Value Line, the stock is modestly undervalued currently.

Verizon’s financial strength was rated 4 out of 10 by GuruFocus. Despite issuing new long-term debt over the past several years, it is still at a manageable level as a result of adequate interest coverage. The Altman Z-Score of 1.44 warns it is in distress, however, and could be at risk of going bankrupt. Value creation is occurring, though, as the WACC is overshadowed by the ROIC.

Although the operating margin is in decline, the company’s profitability scored a 7 out of 10 rating as a result of strong returns that outperform a majority of industry peers. Verizon is also supported by a moderate Piotroski F-Score of 5, meaning business conditions are typical for a stable company, and a predictability rank of one out of five stars. GuruFocus says companies with this rank return an average of 1.1% annually.

GuruFocus data shows Buffett has lost an estimated 11.57% on his investment since the third quarter of 2020, while Rolfe has generated a 3.72% return since the first quarter of 2016.

With a 3.84% stake, Buffett is Verizon’s largest guru shareholder. Other top guru investors include Pioneer Investments, Diamond Hill Capital (Trades, Portfolio), the Parnassus Endeavor Fund (Trades, Portfolio) and Simons’ firm.

Visa

In the third quarter, Buffett trimmed his Visa (V, Financial) position by 4.26%, while Rolfe curbed his holding by 0.99%. The gurus have a combined equity portfolio weight of 5.10% in the stock.

The San Francisco-based company, which facilitates electronic payments and provides credit card services, has a $442.97 billion market cap; its shares were trading around $203.35 on Monday with a price-earnings ratio of 36.15, a price-book ratio of 12.87 and a price-sales ratio of 18.96.

Based on the GF Value Line, the stock appears to be fairly valued currently.

GuruFocus rated Visa’s financial strength 6 out of 10 on the back of adequate interest coverage. In addition, the high Altman Z-Score of 7.04 indicates it is in good standing. The ROIC also exceeds the WACC, indicating value is being created.

The company’s profitability fared better, scoring a 9 out of 10 rating as a result of strong margins and returns that outperform a majority of competitors. It also has a high Piotroski F-Score of 7. Visa has recorded steady earnings and revenue growth, contributing to a five-star predictability rank.

GuruFocus estimates Buffett has gained 347.82% on his investment since the third quarter of 2011, while Rolfe has returned roughly 122.59% so far.

Fisher is the company’s largest guru shareholder with a 0.86% stake. Frank Sands (Trades, Portfolio), Pioneer Investments, Chuck Akre (Trades, Portfolio), Segalas, PRIMECAP Management (Trades, Portfolio), Andreas Halvorsen (Trades, Portfolio), Daniel Loeb (Trades, Portfolio), Diamond Hill, Mairs and Power (Trades, Portfolio) and Simons’ firm also have large holdings of Visa.

U.S. Bancorp

While Buffett reduced his stake in U.S. Bancorp (USB, Financial) by 1.92% in the third quarter, Rolfe trimmed his position by 12.01%. Together, the gurus have a combined equity portfolio weight of 2.90%.

The bank holding company, which is headquartered in Minneapolis, has a market cap of $84.52 billion; its shares were trading around $56.96 on Monday with a price-earnings ratio of 11.45, a price-book ratio of 1.76 and a price-sales ratio of 3.76.

The GF Value Line suggests the stock is fairly valued currently.

Weighed down by debt-related ratios that are underperforming in comparison to over half of its industry, U.S. Bancorp’s financial strength was rated 3 out of 10 by GuruFocus.

Warren Buffett Portfolio

The company’s profitability fared better, scoring a 6 out of 10 rating. U.S. Bancorp is supported by margins and returns that top over half of its industry peers as well as a high Piotroski F-Score of 7. Consistent earnings and revenue growth also contributed to a 4.5-star predictability rank. GuruFocus data shows companies with this rank return, on average, 10.6% annually.

According to GuruFocus, Buffett has gained an estimated 77.7% on his investment. Rolfe has gained approximately 31.86% since the first quarter of 2016.

Buffett is the company’s largest guru shareholder with an 853% stake. Other top guru investors include Chris Davis (Trades, Portfolio), Barrow, Hanley, Mewhinney & Strauss, Grantham, First Eagle Investment (Trades, Portfolio), Mairs and Power (Trades, Portfolio), PRIMECAP, Yacktman Asset Management (Trades, Portfolio), Pioneer Investments and Tweedy Browne (Trades, Portfolio).

Kraft Heinz

During the quarter, both gurus left their Kraft Heinz (KHC, Financial) positions unchanged. Buffett has a 325.6 million-share stake, while Rolfe holds 5,750 shares. The two gurus have a combined equity portfolio weight of 4.12% in the stock.

The Chicago-based packaged goods company, which ows the Oscar Mayer, Kraft, Velveeta, Heinz and Jell-O brands, has a $41.94 billion market cap; its shares were trading around $34.26 on Mondaywith a price-earnings ratio of 18.34, a price-book ratio of 0.84 and a price-sales ratio of 1.6.

According the the GF Value Line, the stock is fairly valued currently.

Weighed down by weak interest coverage and a low cash-to-debt ratio of 0.1, Kraft Heinz’s financial strength was rated 4 out of 10 by GuruFocus. The Altman Z-Score of 1.01 warns the company could be in danger of bankruptcy if it does not improve its liquidity. It is also struggling to create value as the WACC surpasses the ROIC.

The company’s profitability fared better with a 7 out of 10 rating, driven by an expanding operating margin. Its returns, however, underperform over half of its competitors. Kraft Heinz also has a high Piotroski F-Score of 7. Despite recording a decline in revenue per share over the past five years, the company has a one-star predictability rank.

Buffett has lost an estimated 54.38% on the investment based on GuruFocus data, while Rolfe has gained 3.52%.

Once again, Buffett is the largest guru shareholder of Kraft Heinz. First Eagle, Dalio and Pioneer Investments also have large positions in the stock.

Portfolio composition

Buffett’s $293.45 billion equity portfolio, which is composed of 43 stocks, is largely invested in the technology and financial services sectors.

Rolfe’s $709 million equity portfolio, which is composed of 40 stocks, is heavily invested in the technology, communication services and financial services sectors.

Management

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Disclosures

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The views of this author are solely their own opinion and are not endorsed or guaranteed by GuruFocus.com.