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Funds That Buy Like Buffett 2016

Like the Oracle of Omaha, these funds prefer to buy and hold quality businesses.

Yes, it's that time of year again. On Saturday, April 30, Warren Buffett and Charlie Munger will convene the annual

As usual, Buffett and Munger will conduct business and answer questions on Saturday for tens of thousands of shareholders and fans (40,000 attended last year), and this year they'll also live-stream the whole affair for those who can't be there in person. One of the main topics of conversation will be Berkshire's 2015 results, which were somewhat mixed, in keeping with last year's crazy market. On the one hand, the stock performed significantly worse than the broader market, losing 12%, its fifth-worst annual showing in the past 50 years. On the other hand, Berkshire's per-share book value, Buffett's preferred metric for evaluating the health of its businesses, grew 6.4%, better than the 1.4% rise in the S&P 500 benchmark, following three-straight years in which Berkshire's book value grew slower than the S&P.

All this and plenty more is in

, in which Buffett discusses the company's results while also holding forth on various other topics of interest. He notes that good results at subsidiary Burlington Northern Santa Fe were among the biggest drivers of Berkshire's strong 2015 performance, and discusses the firm's two most important acquisitions of the past year: the purchase of Precision Castparts for $37 billion (finalized in January 2016) and the merger between Kraft (co-owned by Berkshire and 3G Capital) and Heinz to form

As usual, this shareholder letter (also available in Berkshire's

) also lists the top stocks in Berkshire's investment portfolio as of Dec. 31, 2015. This year's list shows that the top 10 stock holdings didn't change much from a year ago. The top holding by market value is still longtime Buffett favorite

Following the release of the past six Berkshire Hathaway annual reports, we looked at the funds with the highest percentage of their portfolio in Berkshire's top 10 stock holdings at the end of 2009, 2010, 2011, 2012, 2013, and 2014. In honor of this weekend's shareholder meeting, we revisited the question and calculated which funds have the biggest weighting in Berkshire's latest top 10 holdings, as listed above. We left out sector funds such as Vanguard Consumer Staples Index VCSAX and Fidelity Select Consumer Staples FDFAX, both of which would otherwise be in the top 10, as well as funds with under $100 million in assets and those with less than a five-year track record. With those constraints, the following table shows the 10 funds with the most Buffett-like taste in stocks, including each fund's five-year return and percentile rank in its Morningstar Category as of April 26, 2016:

This list includes four notable management teams that manage half of the 10 funds. Not surprisingly, these managers all follow Buffett in liking big, profitable companies with strong competitive advantages, but they differ in other ways.

First there's Donald Yacktman and his son Stephen Yacktman, who manage

Next there's

Silver-rated

Finally, there's Silver-rated

Although most of these funds have strong long-term track records, seven of the 10 have trailed the large-blend category during the past five years. That's not too surprising, for the same reason it's not surprising that Berkshire Hathaway has lagged the broader market during the same period: The best performers during the past five years have been relatively risky stocks with a lot of debt, rather than the stable cash cows favored by Buffett. But it's worth noting that the two Yacktman funds are the only ones on this list to have beaten Berkshire Hathaway during the past 10 years, illustrating how tough it is to beat Buffett over the long term. That long-term strength illustrates why so many people pay attention to Buffett's portfolio, and why emulating his general approach has been a winner over time.

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