Mad Money

The Breakdown on Buffett: Part 2

Tonight, Cramer analyzed 20 of Warren Buffett’s stocks to see if the Berkshire Hathaway chairman is still worth the praise the investing world heaps on him.

People piggyback on Berkshire buys all the time, which makes sense because Buffett is known for picking winners. But that doesn’t mean he hits a home run every time.

Cramer on Buffett (pt.3)

You always have to do your homework before buying a stock – no matter who is giving the advice. Luckily, Cramer did some of it already for tonight’s show.

The last post covered the first 10 Buffett stocks. Number 11 is U.S. Bancorp. USB has a 4.7% yield that’s been consistently raised over the last 35 years. Throw in the buyback and the clean balance sheet and you’ve got a winner in USB, Cramer said.

Cramer likes the financials, but not M&T Bank. It has bad loans, he said. With so many great banks, why would Buffett want to own this one?

American Standard is great, though, because it’s a “buy one, get two for free” situation after ASD’s breakup into three companies, Cramer said.

Cramer already said he likes the rails, so Buffett’s choice of Norfolk Southern is OK, but her prefers Union Pacific.

Buying WellPoint was a good move, Cramer thinks. He said it’s one of the best cost-containment names in the business.

Buffett owns some General Electric, the parent company of CNBC. For that reason, Cramer won’t comment on it, but you might notice it’s been a winner this week.

Both Buffett and Cramer own UnitedHealth – Buffett through Berkshire and Cramer though his charitable trust. He thinks the giant buyback and the deal with Sierra Health make this is another cost-containment story worth getting behind.

Ingersoll-Rand is a part of the bull market in machinery, so Cramer is hard-pressed to find a problem with it. A smart buyback when the stock was cheap shrunk the share count and boosted the earnings per share. Now the stock is one of the cheapest in the industry.

Finally, Buffett has a position in H&R Block , which Cramer thinks is a big mistake. They company is in such bad shape it deserves to go lower, he said.

Buffett and Cramer agree on 14 out of 20 of the stocks Berkshire owns – that’s pretty Cramer said. As far as he’s concerned, Buffett’s still got it. 

Bottom Line: If you can find a stock that both Buffett and Cramer agree on, you’ve probably got yourself a winner.

Jim’s charitable trust owns Union Pacific and United Health.

Questions? Comments?