How to invest like the super investors

Warren Buffett and his business partner Charlie Munger are the world’s most successful investors over time, and you can follow what they invest in through the company “Berkshire Hathaway”. If you learn from the best in the world, you’ll get excellent results and you can copy the exact same trades as Buffett and Munger. Yes, you read that right: you can buy the same wonderful businesses that Berkshire Hathaway buys.

Though you have to wait a few months to have visibility into what Munger and Buffett bought, you’ll find that most of the time the price of the business is still favorable because fewer people than you might expect follow this strategy. 13F forms are filed up to 45 days after the end of a quarter and the next 13F reports for second quarter 2021 are published on August 16th 2021.

Warren Buffett. Photo by Aaron Friedman

Every quarter the investments of super investors must be filed through the 13F form with the Securities and Exchange Commission (SEC). All institutional investment managers with at least $100 million in assets under management must file a 13F form.

On SEC’s website you can find purchases from not only the dynamic duo but also from other value investors’ funds like Phil Town, Guy Spier and Mohnish Pabrai. You have to search for their investment funds - not their names. You’ll also want to follow other successful value investors (see list below). Some websites capture the filings from SEC’s website and publishes it in a more digestible view like whalewisdom.com. Scan through the lists of stocks from super investors and if any of their stocks are within your circle of competence, add them to the list of stocks you will research.

Remember, that before you mindlessly jump into a stock, you must understand the business. Don’t invest in a stock because Berkshire Hathaway invests in it. You’ll want to know why Berkshire invested in the stock and if it was Buffett or maybe Ted Weschler and Todd Combs who made the decision. Ted is chief investment officer at Berkshire and Todd CEO of Geico (a Berkshire business) and they invest in companies through Berkshire Hathaway. 

How do I know that you must understand the business before you copy a Berkshire investment? Well, I made a mistake and learned. In the late summer of 2020 the 13F filings for second quarter of 2020 was posted and I saw that Berkshire had invested in a company. I jumped in without doing my due diligence and shortly after I entered, Berkshire Hathaway started exiting. It turned out that it wasn’t Buffett, who decided to invest in the stock, but it was Buffett who decided to leave. The price fell and hasn’t regained the price I bought at. Since it’s an inflation proof stock I’m hanging on for now, but I learned a valuable lesson that day. If I’m inspired by a value investor, I’ll investigate the company and sector first, to see if I understand the business. I do that using my checklist. If I don’t understand the business then, I won’t invest.

To that point I remember Phil Town mentioning that he bought several books about railroads and diving into the railroad businesses, so that he could follow Warren Buffett into a railroad stock.

What else can you do to invest like the super investors?

If you’re researching a company that is within your circle of knowledge you can easily check if any value investors have invested in the stock. What you can do is to go to a website called GuruFocus.com and find out what these super investors are buying. Search for your company on the site and look through the Guru list at the bottom of the company page. You can see who invested in the company and if they’re value investors. A clue to find out if they’re value investors is to check how many stocks they have in their portfolio. If it’s under 50 it’s very likely that the investor is a value investor.

Who are the super investors?

Here’s a list of these super investors, who are all value investors and you can go to GuruFocus and look up these investors and see their most recent trades.

Warren Buffett
Charlie Munger
Mohnish Pabrai
Howard Marks
Bill & Melinda Gates Foundation Trust

Prem Watsa

Bill Nygren

Bill Ackmann

David Tepper

Whitney Tilson

Seth Klarman

Phil Town and Guy Spier are not on GuruFocus but their trades can be found via the 13F filings. Do you recommend following other Value Investors? Please comment below.

In my investing course I share knowledge about how to invest like the super investors. I'd love to teach you and you can sign up here (click on the image)