Buffett, Berkshire Continue Auto Industry Play

Less than a month after purchasing Van Tuyl Group, the largest privately held dealership group in
the United States, Warren Buffett’s Berkshire Hathaway is making another bet on the auto industry, with one of its subsidiaries purchasing $560 million worth of Axalta Coating Systems Ltd. shares.

Axalta, a subsidiary of The Carlyle Group, makes coatings used in light OEM vehicles, commercial vehicles and electric motors, buildings and pipelines. It is the largest global supplier of coatings to auto-repair shops and the second-largest supplier to car makers (H/T ValueWalk). Berkshire Hathaway agreed that it would not dispose of the shares for 90 days following the consummation of the sale.

In addition to its Axalta and Van Tuyl deals, Berkshire in recent years has also purchased lubricant firm Lubrizol, and it has a stake in Precision Castparts, a manufacturer of aerospace components.

Currently, several auto-related stocks are getting high marks from Validea’s Guru Strategies, including Advance Auto Parts (AAP), CarMax (KMX), and Asbury Automotive Group (ABG).

Validea’s Warren Buffett-inspired portfolio is up 8.6% annualized since its late-2003 inception vs. 6.1% for the S&P 500. Check out its holdings here.