All the moves like Buffett, I've got the moves like Buffett, I've got the moooooves like Buffett.
If Warren Buffett, whose longterm approach and stellar track record are well documented, were to create a portfolio from scratch, what stocks might he pick? Using a quantitative approach, Credit Suisse walked through this exercise recently. Berkshire Hathaway's (BRK.A) acquisition criteria outlined in its annual report: i) Earnings Record - Record of consistent earnings power; ii) Return on Invested Capital - Good return on equity with little or no debt; iii) Management - Honest, capable management in place; iv) Type of business - Simple business with barrier to entry for competitors.
Translating these criteria into a set of quantitative rules, Credit Suisse was able to identify some 27 companies that passed the quantitative and qualitative criteria out of the combined S&P 1500, Russell 3000, and S&P/TSX Composite (minimum market cap $250 million). No Canadian companies passed the screening criteria, however five tech companies did. Would Buffett consider: Adtran (ADTN), Altera (ALTR), Avago Technologies (AVGO), F5 Networks (FFIV) or NetApp (NTAP)? Buffett recently shed his aversion to tech stocks with investments in IBM (IBM) - $11 billion and Intel (INTC) - $220 million.
Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.
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