You see, the form 13-F discloses all of Berkshire Hathaway’s stock positions as of March 31. Who wouldn’t want to take a peek at Warren Buffett’s portfolio?! In an article titled “The 38 Stocks in the Buffett Portfolio,” Morningstar.com published the details of form 13-F.

 Here is Buffett’s portfolio (ranked by Morningstar from the largest holding to smallest; foreign stocks are right at the end):

1. Coca-Cola (NYSE:KO)
2. American Express (NYSE:AXP)
3. Wells Fargo (NYSE:WFC)
4. Procter & Gamble (NYSE:PG)
5. Moody’s (NYSE:MCO)
6. Wesco Financial (AMEX:WSC)
7. Anheuser-Busch (NYSE:BUD)
8. Washington Post (NYSE:WPO)
9. ConocoPhillips (NYSE:COP)
10. Ameriprise Financial  (NYSE:AMP)
11. Wal-Mart (NYSE:WMT)
12. M&T Bank (NYSE:MTB)
13. USG Corporation (NYSE:USG)
14. American Standard  (NYSE:ASD)
15. First Data (NYSE:FDC)
16. H&R Block (NYSE:HRB)
17. Comcast (Nasdaq:CMCSA)
18. Costco Wholesale (Nasdaq:COST )
19. General Electric (NYSE:GE)
20. Tyco International (NYSE:TYC)
21. SunTrust Banks (NYSE:STI)
22. Nike (NYSE:NKE)
23. Gannett  (NYSE:GCI)
24. Gap (NYSE:GPS)
25. Home Depot  (NYSE:HD)
26. Torchmark (NYSE:TMK)
27. Iron Mountain (NYSE:IRM)
28. Lexmark International (NYSE:LXK)
29. United Parcel Service (NYSE:UPS)
30. Outback Steakhouse (NYSE:OSI)
31. PetroChina (NYSE:PTR)
32. ServiceMaster (NYSE:SVM)
33. Sealed Air (NYSE:SEE)
34. Pier 1 Imports (NYSE:PIR)
35. Lowe’s Companies (NYSE:LOW)
36. Comdisco Holding (OTC:CDCO.OB)
37. Tesco PLC (OTC:TSCDF.PK)
38. Kingfisher (OTC:KGFHY.PK)

Now, one way to replicate Buffett’s portfolio is to buy his investment vehicle, Berkshire Hathaway (NYSE:BRK-B). The stock is trading at about $3,070. The stock has tripled since 1996.

Or, you can be more adventurous and pick your own stocks. Remember, we’re replicating Buffett’s strategy, not necessarily his entire portfolio stock by stock. And Buffett’s money making strategy is very simple — don’t overpay for a stock. That also means never overpay for earnings growth. Also, if you looked at the stocks above, most of them pay good dividends. So the key to investing is: Buy stocks at a reasonable price and buy stocks that pay dividends.

Here is a quick but powerful formula:

PE ratio / (growth rate + dividend yield)

That’s the stock’s P/E divided by growth rate, plus dividend yield. Any stock with a score of less than 1 is worth looking into. Here is a stock screen that I ran for smaller stocks using this formula:

Stock                 Symbol          P/E         EPS Growth            Dividend Yield           Score
                                                             (Annual %)              (%)                          (<1 is good)

Knightsbridge      VLCCF           6.70         15.79                        17.60                       0.20
Tankers Ltd.

Tuesday              TUES           10.80         18.82                         5.10                       0.45  
Morning Corp.

Seaboard Corp.     SEB            7.10          96.92                         0.20                       0.07

You can see from the above results how a combination of low P/E and high dividend yields bring down the score. If you wanted to magnify the profits from these stocks, just reinvest the dividends back into buying more of the stock.

Regards,

Sala Kannan
May 26, 2006
P.S: I’m on a hunt for stocks with great valuations from all over the world. My quest has already taken me to Africa and Mexico. Now, I’m headed to Indonesia in just 2 days time. In next week’s Sleuth, I’ll write to you from Indonesia with my notes, observations and lots of photos!

Exposed: Warren Buffett’s Entire Portfolio and How You Can Replicate It was originally featured in the Penny Sleuth.