ETFs To Cover What Warren Buffett Is Buying

Prominent value investor Warren Buffett made a bet on the future of America with his purchase of Burlington Northern Santa Fe (BNI). While few are as rich as Buffett, it doesn’t mean you can’t play along with what he’s buying using exchange traded funds (ETFs).

Warren Buffett’s company Berkshire Hathaway (BRK-A) announced this week that it plans to buy Burlington Northern Santa Fe for $100 a share, writes Jack Hough for SmartMoney. Buffett named rail car loadings as his favorite economic indicator.

• iShares Dow Jones Transportation Average (IYT): up 7.2% year-to-date ; BNI is 11.4%

According to records, Berkshire Hathaway sold shares of Moody’s (MCO) after the ratings firm signed off on mortgage securities that turned toxic. During the second quarter, Berkshire dumped Constellation Energy (CEG) and reduced holdings in ConocoPhillips (COP), Home Depot (HD) and United Health Group (UNH). The money was used to purchase preferred shares of General Electric (GE) and Harley Davidson (HOG).

• Vanguard Industrials ETF (VIS): up 12.5% year-to-date; GE is 12.5%

• First Trust Large Cap Value Opp AlphaDEX (FTA): up 28.5% year-to-date; HOG is 1%

Berkshire also bought two common stocks that are more widely available: Becton Dickinson (BDX), distributor of medical supplies,  and Johnson & Johnson (JNJ), maker of drugs, consumer products and medical supplies. Value investors should noted that both BDX and JNJ have increased dividends each year for more than three decades.

• iShares Dow Jones U.S. Healthcare (IYH): up 10.3% year-to-date; BDX is 1.2%

• Pharmaceutical HOLDRs (PPH): up 3.5% year-to-date; JNJ is 25.2%

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