The secret stock Warren Buffett just spent $10 billion on (and finding similar ASX shares)

Investors were kept in the dark about Warren Buffett's $10 billion share purchases since late 2023.

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There have been a lot of rumours surrounding the secret stock Warren Buffett has been pouring billions of dollars into since 2023.

Today, we have our answer.

United States-listed insurance giant Chubb Ltd (NYSE: CB).

Why did Warren Buffett keep the investment under wraps?

Aged 93, Warren Buffett is still actively managing Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), though succession processes are in place.

Yesterday, overnight Aussie time, Berkshire's filing with the US Securities and Exchange Commission (SEC) revealed the company had bought some 26 million Chubb shares for roughly US$6.7 billion (AU$10 billion) over the first quarter.

Although the Chubb shares were bought over a period of months, Berkshire had requested its share purchases were kept confidential from prior filings with the SEC.

Why?

Well largely because investors the world over tend to copy Warren Buffett's investments. That can see the share price of companies he's buying rise simply on the news of his interest. And that makes it harder for him to abide by one his golden rules, "Never overpay for anything."

The Oracle of Omaha, after all, started his investing life with almost nothing and is now worth more than US$136 billion (AU$205 billion), according to Forbes.

Indeed, the Chubb share price has soared 8.3% in after-hours trading since the news of Berkshire's investment hit the wires.

"Millions of people follow what Buffett does," David Kass, a finance professor at the University of Maryland said (quoted by Bloomberg). "Warren Buffett would be more sensitive to the issue than others."

And the $10 billion investment in Chubb aligns well with another Buffett investing nugget, "You don't have to be smart, as long as you stick to what you know."

The billionaire is indeed quite familiar with the insurance business, with Berkshire owning a number of insurance companies, including Geico.

"Chubb is an attractive equity investment for Berkshire because it operates in a business Berkshire knows well: property-casualty insurance," Cathy Seifert, a CFRA Research analyst said (quoted by Reuters).

Despite the Chubb investment, Berkshire's cash holdings hit an all-time high of US$189 billion at the end of March.

Are there similar ASX shares to invest in?

Investors looking to mimic Warren Buffett on the ASX will need to look at some smaller companies.

Chubb, a property-casualty insurance business, operates in 54 countries and has a market cap of US$103 billion (AU$154 billion).

With that said, if I were aiming to mimic Warren Buffett today on the ASX, I'd look at buying shares in QBE Insurance Group Ltd (ASX: QBE).

The S&P/ASX 200 Index (ASX: XJO) insurance company has a market cap of $27 billion and has been a very strong performer in 2024. Year to date, the QBE share price is up 22%.

Atop the potential for further share price gains, the ASX insurance stock trades on a partly franked dividend yield of 3.5%.

Going by these stats, this ASX share ticks at least one box for Warren Buffett.

Namely his mantra that, "The greatest protection against inflation is ownership in a business that goes up in value."

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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