Buffett Buys Wal-Mart

On Monday Warren Buffett's Berkshire Hathaway announced that they have acquired approximately 20 million shares of Wal-Mart worth about $874 million. This amounts to a little less than one half of one percent of all outstanding Wal-Mart shares, making Buffett and Berkshire one of the top 20 owners of Wal-Mart.

As I had said in mid September (approximately the time Buffett was buying), Wal-Mart stock had begun to really look cheap on a enterprise value to EBITDA basis at just over $43 per share. The Wal-Mart buy makes a lot of sense for Berkshire and its portfolio of great consumer brands. At $50 per share today, it seems that Buffett has already made a nice profit on his investment.

I should also mention that Berkshire also bought $1.9 billion worth of Budweiser, a purchase that seems very similar to Buffett's purchase of Coca-Cola stock years ago.

Timothy Burger
timothyb(at)timothyburger.com