Warren Buffett makes turning money into more money look easy, as his current net worth sits at $81.9 billion.
It's no surprise then that so many investors want to emulate the Oracle of Omaha's investing strategy. But today, I'm going to show you a way to do it that you've never heard of before, and it blows all the other conventional strategies out of the water...
You see, there are two well-known strategies for investing like Buffett: follow the trades he makes, or invest in Berkshire Hathaway.
But each has its flaws...
First, average investors can't make deals like Buffett's because they don't have access to Berkshire's dealmaking power.
What separates the Oracle of Omaha from the average investor is that he structures deals so that he is almost guaranteed to win.
And he can do that because of his billions of dollars and trusted reputation.
For example, Buffett invested $5 billion in Goldman Sachs Group Inc. (NYSE: GS) in 2008 during the financial crisis.
Goldman received much-needed capital, and Buffett's credibility helped it retain investor support.
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In exchange, Buffett received $5 billion worth of "preferred" shares. These are considered safer than "common" shares because if Goldman went bankrupt, preferred shareholders are paid before common shareholders from the liquidation of a company.
Goldman also agreed to pay a 10% dividend on Buffett's preferred shares.
On top of all that, Buffett also got the option to buy 43.5 million additional shares of GS stock at $115 per share before Oct. 1, 2013.
The average retail investor could never make a deal like this.
When all was said and done, Buffett made roughly $3.1 billion in cash and stock from his original $5 billion investment, according to Quartz.
Second, you could invest in Buffett's company, Berkshire Hathaway Inc. (NYSE: BRK.A), but one share of BRK.A will set you back $283,200.
You could settle for Berkshire Hathaway Inc. Class B (NYSE: BRK.B) shares, trading for $186.44 per share.
But the cheaper price tag creates more volatile price swings because it draws more retail investors, who are more likely to sell during a downturn.
For example, over the last three months, the price of BRK.B is down 5.2%, while BRK.A is only down 3.57%.
If the markets are down, it's easier to unload a few shares of BRK.B for hundreds of dollars.
In comparison, selling just one share of BRK.A removes nearly $300,000 out of a portfolio, so BRK.A shareholders are more likely to hold on to their shares.
That creates a more stable price.
Another disadvantage is Berkshire hoards cash and doesn't return it to shareholders through a dividend. Berkshire has $116 billion in cash, and Buffett says he isn't seeing many deals on the horizon.
Paying full price for these shares means you sacrifice growth to Buffett's conservative strategy, and you aren't rewarded with a cash dividend.
Fortunately, I uncovered a profit opportunity that lets you trade just like Buffett for a fraction of the price...
This Lets You Own What Warren Buffett Owns
As you know, I'm always looking for secret ways to make a lot of money. I look for strategies that the MBAs and the CFAs of the world have largely ignored.
Either they don't understand these strategies, or they're taught to ignore them...
But one of the best strategies that goes overlooked and I'm going to share with you today is the buying of closed-end funds.
Closed-end funds are assets that trade on public exchanges with only a fixed number of shares. Unlike mutual funds, they truly trade on the highs and lows of market sentiment, and they often trade well below their net asset value.
That means you're ahead of the curve, buying something at a discount before the rest of the market notices. When it does, stock prices shoot up, and you are rewarded for your forward-thinking approach.
And not only can shareholders profit from the stock price climbing, but they also receive value from dividend payouts.
Through this one closed-end fund, you can invest like Buffett at a discount and be paid to do it.
Here's how to invest like Buffett at a 30,000% discount...
Trade Like Warren Buffett for Just $10
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Boulder Growth & Income Fund Inc. (NYSE: BIF) is highly concentrated in Berkshire Hathaway A shares (24.76%), B shares (7%), and a string of other stocks owned by Buffett's investment vehicle.
It has current and former Berkshire favorites like Yum! Brands Inc. (NYSE: YUM), American Express Co. (NYSE: AXP), and Cisco Systems Inc. (Nasdaq: CSCO).
That means you're getting direct access to Berkshire Hathaway and Warren Buffett's stock-picking genius, but you're doing it at a fraction of the cost.
But it gets even better...
While Buffett refuses to pay a dividend to Berkshire shareholders, this closed-end fund offers a dividend yield of 3.69%.
Plus, it's trading at a discount of 15.62% below its net asset value, which means that you're paying about $0.85 for every dollar of value.
But this 15% discount won't last.
Whether the market corrects itself or the Berkshire stock price starts climbing, the price is going to climb and reward savvy investors.
The best part is, by buying BIF at 16% below net asset value, you're making the kind of special deal usually reserved for the Buffetts of the world. You're getting exposure to BRK.A, BRK.B, and Buffett's favorite stocks for a fraction of what other investors are paying.
That's part of how Buffett has gotten so rich, and you can use it too.
Currently, BIF costs $10.37 per share.
And when the price of Berkshire climbs, so will the price of BIF.
In the next 12 months, Keefe, Bruyette, and Woods Inc. expects the BRK.A stock price to climb from $284,640 per share to $349,730.
That's a potential gain of 22.86%.
Also, it expects BRK.B shares to climb from $186.44 to $233.27. That's another potential gain of 25.11%.
But aside from the 12-month outlook, what I really love about BIF is its management.
Stewart Horejsi, with the assistance of other advisory personnel, runs the day-to-day management of BIF's assets.
And if there's one guy outside of Buffett you'd want running your firm, it's Horejsi...
Heir to the Brown Welding company, Horejsi first learned about the Oracle of Omaha in Adam Smith's book, "The Money Game."
He bought 40 shares of Berkshire at $265 each in 1980 and began putting his family business' profits into Berkshire stock.
Smart move.
Horejsi eventually built his Berkshire stake to 5,800 Class A shares by 1998, according to Bloomberg.
He sold Brown Welding a year later, and he accumulated control of four closed-end funds.
Today, he's worth $1.76 billion.
And if you want to get rich like Horejsi, buying a closed-end fund run by someone with such incredible foresight is where you start.
''If you can buy Berkshire at 80% of where it's trading, that's a better value," Horejsi told Bloomberg.
I agree.
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.