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Funds That Buy Like Buffett

Emulating Warren Buffett's strategy has worked well over time.

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When Warren Buffett talks, people listen. Any time the legendary investor weighs in on market matters, either through his words or through the actions of his investment vehicle,  Berkshire Hathaway (BRK.B), knowledgeable investors pay close attention. That's why the release of Berkshire's annual report each February is such an eagerly anticipated event: It includes Buffett's annual letter to Berkshire shareholders, in which the Oracle of Omaha gives his take on recent events and drops nuggets of investing wisdom. This year's letter (released Feb. 27 and available here) is as quotable as ever, as Jason Stipp reported after it came out.

Another reason for the widespread anticipation of Berkshire's annual report is its insights into Buffett's investment decisions from the previous year. While many were revealed during earlier disclosure, the annual report provides the big picture, including a list of the biggest holdings in Buffett's investment portfolio. Morningstar's Bill Bergman recently analyzed Buffett's 2009 trading activity, including his top 10 stock holdings as of Dec. 31, 2009. Berkshire's top equity holding is still  Coca-Cola (KO), where Buffett is the largest shareholder (and a board member); the list also includes Burlington Northern, the railroad Berkshire recently bought outright. (The deal didn't close until this year, so Burlington Northern was still publicly traded as of Dec. 31.) Essentially all of Buffett's stock holdings are big, stable, profitable companies with solid competitive advantages--the same type of business he has always preferred.

Plenty of mutual fund managers are Buffett fans who emulate his investment approach in one way or another. Last August we took a look at mutual funds with the biggest Berkshire Hathaway stakes, including such excellent funds as  Sequoia (SEQUX) and  Clipper (CFIMX). When Buffett announced his plans to buy the rest of Burlington Northern back in November, Ryan Leggio looked at funds with the biggest stakes in that stock, which jumped in price when the deal was announced.

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David Kathman does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.