How To Beat Warren Buffett At His Own Game

Wednesday morning, Electricité de France (EDF.PA) made another attempt to purchase Constellation Energy Group (CEG). EDF’s new offer of $52 a share for half of the company is almost as much as MidAmerican Energy -Warren Buffett’s subsidiary of Berkshire Hathaway (BRK-A) - paid for the entire company in September.

His $4.7 billion deal for Constellation - about what it cost to build one nuclear reactor - bought him three nuclear plants and 75 power-generating units. CEG jumped 12% this morning to over $28.

Buffett has been on a buying spree of U.S. equities over the past few months. And he even wrote an op-ed for the Wall Street Journal to support why. But before today, CEG was trading below his purchase price. And it’s not the only one.

A $3 billion investment in General Electric (GE) got Buffett warrants to buy GE common stock for $24.50. It sells today for $17.23.

In September, he purchased Goldman Sachs (GS) for $115 a share. Even up 5% this morning, GS is trading around $68 - a 40% discount.

In addition to receiving a 10% return on his $300 million investment in USG Corporation (USG), Buffett’s notes are convertible into common stock at $11.40 a share. USG is trading around $8 today.

Flagship Berkshire Hathaway also has some issues. Last quarter’s profit dropped 77% and its shares reflect that. And just last month, it’s stock plunged to $74,100 - a level not seen since October of 2003.

If history is any indicator of his future success, we won’t be betting against the “Oracle from Omaha” anytime soon. In fact, by picking up a few of these shares, you can say you got a better deal than he did.

Posted in Categories: Contributor, Eurozone, External Research, Stocks, USA.

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