Buffett's Blue-Chip Bargains

A recent Barron's article discussed that there is no arguing that Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) CEO Warren Buffett has an extraordinary track record when it comes to investing. Over the past few years he has had large stakes in companies such as U.S. Bancorp (NYSE: USB), Kraft Foods (NYSE: KFT), Sanofi-Aventis (NYSE: SNY), Johnson & Johnson (NYSE: JNJ) and even Wells Fargo (NYSE: WFC). Buffett as well as other analysts and investors would agree that these are well managed companies and investors could have the chance to get in at an even cheaper price than when Berkshire did. Barron's gives a few examples of his purchases here: U.S. Bancorp, for instance, trades near 23, appreciably below Berkshire's average cost of $31. ConocoPhillips is at 61; Berkshire paid 73. French drug maker Sanofi's U.S.-listed shares, at 34, are below Berkshire's cost of $40 (Berkshire mainly owns the local shares). Kraft is at 32; Buffett paid 33. Barron's based the cost figures on data in Buffett's annual shareholder letter.Buffett is well versed in virtually all asset classes, including stocks, bonds, currencies, commodities and financial derivatives. He has joked, however, that there's no bonus for a "degree of difficulty" in investing. Sometimes, the best investments are the simplest ones. He views Wells Fargo as a high-return bank that sticks to basics. In early 2009, when the stock was around 10, Buffett told a CNBC interviewer that, when the financial crisis ended, Wells Fargo could generate $40 billion of pretax profits before a provision of $10 billion to $12 billion for loan losses. That equates to roughly $4 a share in after-tax profits. Buffett has done quite well with some $21 billion of non-traded securities purchased during the financial crisis, including $5 billion of Goldman Sachs preferred stock with a 10% dividend yield now worth about $2 billion. In April, Barron's speculated Goldman probably would seek to redeem that high-cost preferred. The Wall Street Journal reported Thursday that Goldman is considering such a move.BRK.A is trading higher at $125,110BRK.B is tradiing higher at $83.40