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I followed Warren Buffett’s approach in buying this share

first_img Christopher Ruane | Thursday, 25th February, 2021 | More on: ULVR Our 6 ‘Best Buys Now’ Shares Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Enter Your Email Address Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! See all posts by Christopher Ruane I recently bought shares in a leading UK company. In making my decision, I was thinking through some of the principles that legendary stockpicker Warren Buffett espouses. I used them to help me pick the company in which I invested. Here I explain how.Think that you’re buying a slice of a companyIt’s easy to see shares just as a slip of paper with a monetary value. But Warren Buffett reckons it is more appropriate to think of them as a slice of the company. It may be a very small slice, of course, but it is still part of the company.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…So, instead of just looking at the share price chart, Buffett first asks whether he likes the company and thinks it is attractive to invest in. For example, does it have a strong business model, can it increase prices rather than be forced to cut them, and how large is its defensive moat?That was what I considered in making my choice to buy into Unilever (LSE: ULVR). With its global footprint, technology in everyday products used by billions of consumers, and pricing power, Unilever is the sort of company I think Buffett would like to own. Indeed, he tried to buy it several years ago. It’s the sort of company I decided I would be happy buying a slice of.Value brands for their long-term paybackBuffett has invested in a lot of companies with strong brands. One of his most famous investments is Coca Cola, a share he has said he would be happy to keep forever. But he is also a holder in American company Procter & Gamble. Like Unilever, it has a lot of personal care and cleaning brands.One reason Buffett is so attracted to brands is because they give a company pricing power. Instead of being a price taker, forced to accept whatever the market says the price of a commodity is, a brand allows a company to differentiate its product from competitors and so set its own price. A company like Unilever can see profits fall as input costs rise. So pricing power can be helpful.Another reason brands are attractive to investors like Buffett is because they pay back over the long term. Unilever’s decades of brand building efforts through advertising will continue to drive brand loyalty in future, even if they do not spend any more money on it.Warren Buffett likes to invest in the company, not the managementUnilever shares have fallen lately and currently offer a dividend yield of 3.9%. That is quite high for a FTSE 100 stalwart. I think that partly reflects investor nervousness that the pandemic sales boom will end, combined with nervousness about the company’s leadership quality.I think the leadership is good, but actually I wouldn’t worry too much even if it wasn’t. Buffett as a business leader himself of course likes high-quality leadership. But he doesn’t think it’s necessary. He says that rather than investing in a business purely because of its leadership, it makes sense to invest a business which has such a strong business model it could survive even with bad leadership. What clicks with me about Unilever is its strong market position and brand portfolio. Good leadership is a bonus. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.center_img I followed Warren Buffett’s approach in buying this share christopherruane owns shares of Unilever. The Motley Fool UK has recommended Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Image source: The Motley Fool Simply click below to discover how you can take advantage of this. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. 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