I think many UK shares offer tremendous value right now. Therefore, I’ve been adding to my holdings of these companies over the past few months, sticking to a plan that Warren Buffett has previously advocated.
Warren Buffett’s investment strategy
Buffett is the world’s greatest investor. He didn’t gain this reputation by accident. Over the past six decades, the investor has followed a meticulous strategy that has helped him acquire the fortune he has today.
At its core, this strategy is relatively simple.
Warren Buffett focuses on buying high-quality companies at low prices. That’s all there is to it. He’s not interested in trying to predict future stock market movements or pick high-risk growth stocks. Buffett sticks with blue-chips and buys, intending to hold the shares forever.
Using this approach, Buffett has been able to turn his initial investment of $100,000 into a fortune of nearly $100bn.
The great thing is, anyone can copy this approach. All it takes is a mild understanding of business and a bit of patience.
UK shares on offer
Finding high-quality stocks is the hardest part of copying Warren Buffett’s strategy. Luckily, I think there are plenty of options here in the UK.
Indeed, many UK shares currently trade at highly attractive valuations. These include consumer goods giant Unilever. This stock is one of the world’s largest consumer goods groups, and it has a strong track record of creating value for investors. An investment of £10k in the stock five years ago would be worth just over £18k today.
Another option is insurance group Admiral. In my opinion, this company has similar qualities to one of Buffett’s favourite businesses, GEICO. Both companies are large car insurance firms, which stand out among their peers for their low costs and large profit margins.
Based on the similarities between the two firms, I reckon Buffett might be interested in acquiring Admiral if he were ever given a chance.
I think United Utilities is also a Buffett-like business. Many people don’t realise that the billionaire already owns a large utility business, which operates across the United States. This enterprise also owns a water company here in the UK.
Therefore, I don’t think it’s too much of a stretch to argue Buffett would be interested in acquiring United if it were offered for sale. The organisation’s stable cash flows and dividend potential may attract the investor.
The bottom line
Warren Buffett has not publicly declared ownership of any UK shares. However, I think all of the companies above have the qualities he’s looking for in an investment.
As such, I have been buying two of these firms for my portfolio in recent weeks. By purchasing and holding these stocks, I reckon they can help me retire in comfort when owned as part of a diversified portfolio.