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One Of Buffett's Favorite 'Forever Stocks' Just Announced Another Dividend Increase...

 April 13, 2012 11:58 AM
 


In the 1994 investment classic The Warren Buffett Way, author Robert Hagstrom delves into great detail on the stocks that catapulted Buffett's fortune into what it is today. In the chapter describing Berkshire Hathaway's primary holdings, he quotes Buffett as saying "I find that a long-term familiarity with a company and its products is often helpful in evaluating it."

Familiarity, coupled with a great business that does nothing but grow, are two of Buffett's most important investment philosophies.

A holding period that for all effective purposes is "forever," is another of his cornerstones. At StreetAuthority, we refer to such stock holdings as "Forever Stocks," and it's little coincidence that many of the Forever Stocks we recommend happen to be in Buffett's wheelhouse.

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In Hagstrom's book, he discusses Berkshire holdings such as Coca Cola (NYSE: KO), GEICO, The Washington Post Co. (NYSE: WPO) and American Express (NYSE: AXP). Nearly 20 years after the writing of the book, it's little surprise that Buffett still holds all of these names. He details that Buffett first owned American Express back in the 1960s, when he ran Buffett Limited Partnership the precursor to Berkshire Hathaway (NYSE: BRK-B).

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Today, Berkshire owns a staggering 13% of American Express. Its original cost basis on the 152 million shares is owns is about $1.3 billion. At the end of 2011, it sported a market value of $7.2 billion. It counts as the largest percentage ownership stake in Berkshire's investment portfolio of publicly-traded companies.

Clearly, Buffett has little intention of selling American Express. Its namesake credit cards continue to hold high brand recognition among wealthier consumers around the globe who spend freely and generally pay off their balance every month.


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