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Cramer: Buffett's big four stocks—worth owning?

As the market reels on the halo effect of Warren Buffett's annual shareholder meeting for Berkshire Hathaway, Jim Cramer thought this would be a good time to take a closer look at the Oracle of Omaha's portfolio.

"Just as we can't judge a book by its cover, we can't judge this man by his big four," Cramer said.

The "Mad Money" host has always been adamant that investors should not simply follow Buffett's stock picks, as it is really these companies' regular business and amount of cash flow driving the stocks.

Instead, Cramer thinks it makes more sense to follow Buffett's company, Berkshire Hathaway, rather than the investor. Why? Because you want all of his stocks. Not just a couple!





Warren Buffett, chairman of Berkshire Hathaway Inc.
Lacy O'Toole | CNBC
Warren Buffett, chairman of Berkshire Hathaway Inc.

By investing in Berkshire you will get his investments in 3G and his preferred position in Bank of America, along with his wind tax credits and his mass of pipelines with big cash flow.

With this perspective in mind, what do you do with the big four mainstays of Buffett's investment portfolio—American Express, Coca-Cola, IBM and Wells Fargo?

Cramer went one by one through each company to assess if it is worth it for investors to add a position in their portfolios, because the big four are all in tricky stages in existence right now.

In Cramer's opinion, American Express has lost its edge. And while the brand is strong, the numbers just don't support the amount of growth that portfolio managers want. It can't even stand up to the growth rates of Mastercard or Visa.

"The company has become poorly run, relying on cost cuts and partnerships that are faltering," the "Mad Money" host said.

Coca-Cola, on the other hand, is intriguing to Cramer because of its stake in Monster Beverage, and potential homerun stake it also has in Keurig Green Mountain with its new cold drink machine.

He also likes the 3 percent yield and possible peak in the dollar versus emerging market currencies, which is good news considering that Coca-Cola is hedged versus the euro and yen. Still, he does worry that there could be health consequences attached to drinking Coca-Cola.

IBM is a work in progress, and while it is turning itself around, Cramer is not sure of how quickly it can do that. The company essentially has to go from being a hardware business with a software and consulting edge, to a company that can mine data and bring in social, mobile, cloud and cognitive thinking.

"30 percent of the company is good, 70 percent I can do without. But if it tips, there's a big win, especially if you think, as I do, that the dollar has peaked," Cramer added.

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Out of all four companies though, Cramer's favorite is Wells Fargo. He sees this stock is just one rate hike away from going to $65 from $55, because interest rates bring in more revenue on its cash deposits.

"To me, Wells Fargo is the least tired of the big four, the most inventive and the one with the best growth."

So, if you are an investor looking to start fresh in each sector, Cramer's vote is for Mastercard or Visa over American Express, PepsiCo instead of Coca-Cola, Apple instead of IBM and to keep the best of the banks Wells Fargo.

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