Just as the slogan “What Would Jesus Do?” gained popularity 20 years ago and has since been used by Christian teenagers, the Occupy movement, and anti-fracking protesters alike, investors have their own mantra for salvation: What Would Buffett Buy?
It's no wonder that Warren Buffett has become some kind of superhero to the investing masses. If you had invested $6,225 in one share of his holding company Berkshire Hathaway in September 1990, today you'd be sitting on $172,500… a 2,671% gain.
Judging by Buffett's results and his own vast fortune (he's currently worth $53 billion), he must surely be equipped with a Spidey sense, X-ray vision, and omniscience, all wrapped in the body of an old man that kind of reminds us of George Burns in Oh, God!.
So how does he do it?
Buffett's investment style has been strongly shaped by his mentor, Benjamin Graham (1894-1976), the father of security analysis and value investing, and author of two of the most famous investing books ever written.
Buffett is not a true contrarian and emphatically stays away from industries he doesn't understand, such as technology and gold. However, like contrarians, value investors search for stocks that are severely undervalued, believing that in the end Mr. Market will have to give those companies their due; Buffett's bloodhound instinct in finding undervalued investments is legendary.
So of course the question “What Would Buffett Buy?” is of the greatest interest to millions of wannabe millionaires.
But what if you could know ahead of time which stock Warren Buffett was going to buy next?
On August 15, the investing public found out through fund filings that Warren Buffett had bought more than $500 million worth of Suncor Energy Inc. (NYSE.SU), Canada's largest integrated oil company and the world's largest oil sands company. Suncor has done quite well since the end of June when Buffett bought it, climbing another 20% and adding another C$110 million to Berkshire Hathaway's net worth.
But Casey Energy subscribers were aware of Suncor long before Buffett started buying. We laid out all of the reasons to own the stock in January 2012; we talked about it not only in our newsletter, but also at the Casey conferences—more than a year before Buffett's big purchase.
Don't bother buying Suncor now, though. The stock isn't cheap anymore and is getting more expensive by the day, as the herd is following Buffett's example.
While we do have the utmost respect for him—if you're the third-richest person in the world, you must be doing something right—right now we have one up on Warren Buffett again, just like we did in early January 2012.
The company we recently highlighted in our Casey Energy Dividend newsletter pays a better dividend, has a better near-term growth profile, a higher revenue per barrel, less debt on the books, and a lower debt-to-cash ratio than Buffett's bet in the oil sands.
In fact, even though this company is also a big oil producer, it pays a dividend three times higher than what Buffett is getting on Suncor right now.
Not only that, the company is in a prime position to profit from the voracious Chinese appetite for oil and an America that has realized that a safe source of oil is not just important for its economic growth, but also its national security.
China has already demonstrated to the world that money is no object when it comes to buying quality oil assets—and there are fewer and fewer of those to go around. The United States is falling behind, and in order to catch up, it must begin to bid aggressively on these foreign assets.
Simply put, this oil sands company will be able to make a lot of money by playing the two sides against each other and getting top dollar.
With the “easy oil” starting to be tapped out and growing demand for crude oil around the world, the price of oil will inevitably begin to rise. And our pick stands to make the biggest gains.
As Warren Buffett says, one should stick to investing in businesses one actually understands. We've been spending years analyzing the oil sector, and while Suncor has done a great job thus far, we think that our Casey Energy Dividends oil pick has the potential to deliver even higher returns to our shareholders.
If Warren Buffett were to read our report, he'd be wondering why he doesn't own this company. It fits his model perfectly: cheap valuation and a good, solid dividend. Once he figures it out, I think he'll start buying the stock—but of course, our subscribers will already be well positioned.
Try Casey Energy Dividends at half price today—with full money-back guarantee—and stay ahead not just of the curve and the herd, but of the Oracle of Omaha himself. Click here to get it now.
Additional Links and Reads
Marin's Interview with Eric Sprott (Casey Research)
In this interview, Marin sits down with Eric Sprott, the chairman of Sprott Resources, and asks some tough questions regarding silver as well as the markets. This is an interview you don't want to miss.
China to Invest $13 Billion in Oil and Gas Exploration This Year (Financial Post)
We wrote about China in the last issue of Casey Energy Dividends. The country's oil demand has increased over five times since 1980, and now accounts for 12% of the world's total consumption. China is already the world's fourth-largest producer, but only produces enough for 40% of its domestic needs. Based on those facts alone, the decision to invest in the country is a simple one. However, the problem is finding the right vehicle to do so.
How Far Will Turkey Go to Get Israel's Natural Gas? (International Business Times)
It's no secret that Turkey wants natural gas. Many experts agree that the country's involvement in the current Syrian conflict stems from a pipeline dispute that occurred several years ago. Qatar originally wanted to build a pipeline from its facilities to Turkey; however, since Qatar shares its major gas field with Iran, the idea fell through. Iran, Iraq, and Syria then colluded on a deal to transport gas and bypass Turkey. This left Qatar and Turkey without a pipeline, Turkey without direct access to natural gas, and both countries without pipeline revenue. There are a lot of moving parts in the Middle East, but memories are definitely longer there than in other countries.