The UK shares I think Warren Buffett would buy
Warren Buffett is considered to be the world’s greatest investor. He has earned this reputation thanks to his astute investment strategy and nose for finding and buying high-quality businesses over the past seven decades.
Indeed Buffett, or the ‘Oracle of Omaha’ as he is also known, does not buy any old equities. He focuses his attention on a few key businesses which fit his tightly-controlled investment criteria.
While he has never laid out precisely what he is looking for in any business, Buffett has provided investors with plenty of information to help them make their own educated decisions over the past few decades.
By looking at this advice, I can build some idea of the sort of stocks the Oracle might buy. This will help me compile a list of high-quality stocks to purchase for my portfolio as well.
As such, here are the UK shares that I believe Buffett might be interested in today. He does not currently own any of the equities outlined below.
Warren Buffett buys
The first two companies that I believe he would be interested in are Unilever and Tesco. I think he would own both because he has held Tesco in the past and nearly helped orchestrate a bid of Unilever several years ago.
The investor sold Tesco after its accounting scandal and avoided the takeover of Unilever, due to valuation concerns. However, today Unilever is cheaper, and Tesco has put its past issues behind it. While there is a risk both companies could suffer a decline in profits due to the supply chain crisis, I think Buffett could be a buyer of both.
I already own Unilever in my portfolio and would be happy to buy more. I would also be happy to buy Tesco.
Buffett likes to buy companies that have a unique competitive advantage, like Games Workshop. The producer of miniature war games figures has a devoted fan base and a vast intellectual property portfolio. Thanks to these qualities, the group has higher-than-average profit margins, as production costs are relatively low compared to the price it can sell its miniatures.
The one downside of this as an investment opportunity is its valuation. Shares in Games Workshop look relatively expensive. This is one quality that may put Buffett off from investing in the business. Still, based on the qualities outlined above, I would be happy to add the stock to my portfolio.
I also think he may be interested in a company like BP. This is not a traditional Buffett investment, but he recently acquired shares in US oil giant Chevron. This seems to be a bet on the oil market and low valuations across the sector. As I have noted before, I think BP looks cheap compared to its income and growth potential, although volatile oil prices are a risk.
So while this might not be a traditional Buffett investment, I would be happy to buy the stock for my portfolio.
The post The UK shares I think Warren Buffett would buy appeared first on The Motley Fool UK.
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Rupert Hargreaves owns shares of Unilever. The Motley Fool UK has recommended Games Workshop, Tesco, and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.