Investing

What Is Buffett Doing This Time?

Austin Smith

Published: August 24, 2024 7:25 am

Key Points:

• Warren Buffett purchased Ulta Beauty, taking advantage of its reduced stock price.
• His investment strategy focuses on businesses with consistent, long-term demand.
• Buffett continues to find value even in a high-priced market by targeting enduring companies.
• As good as Buffett is, so far he’s overlooked ‘The Next Nvidia’. See what all the excitement is about by clicking here now

Douglas and Lee discuss Warren Buffett’s recent moves, focusing on his surprising purchase of Ulta Beauty (NASDAQ: ULTA), a popular retailer for cosmetics and accessories. They note that despite the high market prices, Buffett has a knack for finding value in solid, timeless products. Ulta’s stock had previously seen a significant run-up, but after a pullback, Buffett seized the opportunity to buy at a more reasonable price. They also touch on Buffett’s tendency to invest in industries with enduring demand, like cosmetics, which are unlikely to ever fall out of favor. Additionally, they mention Buffett’s substantial cash reserves, which now surpass $277 billion, highlighting his cautious and strategic investment approach in the current expensive market.

Transcript:

So the fascination with Warren Buffett is never-ending.

You know, he’s sold his Apple.

He’s, you know, got more fixed income than the Federal Reserve.

Sold half his Apple.

Yeah, it was a lot.

I know.

So here we go again.

He just bought something, which means that people will be fascinated.

And they’ll ask themselves, should I buy it too?

So tell me.

Well, first, you know, he did that kind of beside the buy of Chubb, which surprised everybody because he already owns a ton of insurance and he owns Geico and a lot of the private companies.

But I thought it was intriguing that he went in to buy Ulta, which is the store that every woman loves because they are the makeup and accessory and everything, you know, women have to have daily.

It’s the one-stop shop for that.

And, you know, I went in and looked at all the, you know, the stock was much higher about a year ago.

So he’s doing what we thought he would do, Doug.

He started to do some bargain shopping for stuff that he likes and he knows cosmetics will never go out of favor.

Well, yeah, listen, even he is so good that in a market like this, which is so expensive and everything he might want to buy is near its top.

Oh, yeah.

He has scavenged around to find something that’s at a reasonable price.

And you’re right.

He loves, loves these companies that have products that are literally never going to go away.

Never.

They may have a bad year or two, but the fact of the matter is, is that you’re right.

These are the kinds of products that are going to sell year in and year out.

So, you know, it’s another brilliant move on his part.

He’s bought something that is probably, he’s probably bought it at a good price point.

Oh, he did.

I, you know, when I saw that he’d made, and the purchase wasn’t…

It wasn’t gigantic, but it was, you know, solid, you know, for his positioning.

But the thing that I thought was interesting is when I looked at the pricing, Ulta had a big run like a year ago, year and a half ago, huge run.

And then, you know, I didn’t watch it for a while.

And then when this happened, I looked at the pricing, the 52-week price.

I’m like, wow, this backed up a bunch.

And, you know, earnings didn’t get crushed by any means.

I mean, they were solid, but…

You know, their comps were so good that you can’t always hit those comps every time.

But he must have had his, you know, portfolio guys looking at it going, hey, Mr. B, we can buy the number one, you know, bricks and mortar cosmetic accessory stock at a discount.

So this is what we’re going to do.

Anytime Warren Buffett does anything…

We’re going to have a segment on it as we have for many, many years, probably close to two decades.

So yeah, I’ll see you about Warren Buffett the minute he blows his nose.

Well, it’s going to be interesting because again, like we said, he has more T-bills than the Treasury does.

So…

And the Fed, rather.

And, you know, that’s just astonishing to me.

But I mean…

That’s the most cash he’s ever had.

It was, you know, $277 billion of cash.

It’s astonishing.

Small countries don’t have that much.

No, they don’t at all.