Warren Buffett‘s incredible success in the stock market has been built on two principles.

The first is his long-term buy-and-hold mentality. Buffett likes to invest in companies with strong fundamentals and staying power that operate in industries with high barriers to entrance. That enables Buffett to hold on to shares for the long haul without having to worry about new players disrupting the competitive landscape.#-ad_banner-#

Owning stocks for the long haul has produced some of Buffett’s biggest gains. Take The Washington Post Co. (NYSE: WPO), for example. Buffett first began buying shares in 1973, recognizing the company’s long-term potential in the highly insulated media business. Forty years later, Buffett still owns those shares and is now sitting on a 6,800% gain, with his $11 million investment ballooning to $820 million in spite of shares falling 50% in the past 10 years.

The second hallmark of Buffett’s investment style is his ability to sniff out a good bargain. Buffett is one of the kings of value investing, noting that the essence of value investing is buying stocks at less than their intrinsic value. This investment style has also produced huge winners for Buffett.

In 1964, American Express (NYSE: AXP) became embroiled in a financial controversy after a vegetable oil company obtained huge loans through falsified documents. The event ended up costing American Express $58 million, sending shares down 50% in a panic. But seeing that it was a misstep for an otherwise strong company that was cashing in on the growing use of credit cards, Buffett stepped in and began buying shares at a big discount. Today, Berkshire’s 151 million shares are valued at $8.7 billion, a 680% return on a $1.28 billion investment.

Although both of those investments were initiated decades ago, Buffett is still practicing his love of stocks with value.

Recent 13-F filings from Berkshire Hathaway (NYSE: BRK-A) show that two of Buffett’s biggest stock buys in the first quarter were financial stocks with value. That means that Buffett thinks they are trading below intrinsic value. It also means that Buffett probably intends to hold for the long haul. That is a chance for regular investors to mimic the moves of one the greatest investors of all time and trade alongside Buffett.

Here are two big value plays Buffett made in financial stocks during the first quarter.

Wells Fargo (NYSE: WFC)
Buffett was busy loading up on shares of Wells Fargo between January and March, closing this year‘s first quarter with 460 million shares, up 4% from last year and his biggest holding with a 20% allocation.

Buffet has been bullish on the financial sector, and he has been making some of his biggest bets with Wells Fargo. The bank’s forward P/E (price-to-earnings) ratio of 11 is in line with its industry peers but a discount from its 10-year average of 13, driven by a big recovery in earnings in the past four years.

Looking forward, analysts are projecting annual earnings growth of 8% in the next five years, exactly the kind of steady earnings growth that Buffett loves. And with a 3% yield, Wells Fargo also pays a nice dividend that handily beats the 2.1% yield on the 10-year Treasury note.

U.S. Bancorp (NYSE: USB)
But while Buffett has been accumulating shares of Wells Fargo for years, he initiated a new position in another bank stock during the first quarter. Berkshire Hathaway disclosed ownership of 50 million shares of U.S. Bancorp, Berkshire’s seventh-largest holding with a 2.6% allocation.

U.S. Bancorp also trades in value territory, with a forward P/E ratio of 11.5 safely below its 10-year average of 12.5. As a midsize bank with limited international exposure, U.S. Bancorp is a domestic financial play. Analysts are calling for annual earnings growth of 8% in the next five years, in line with the industry average. U.S. Bancorp also carries a dividend yield of 2.2% that also beats the yield on the 10-Year Treasury.

Risks to Consider: Financial stocks have been surging on the recovery in housing. Although housing prices continue to rise, weakness in the sector would be a drag for banks.
 
Action to Take –> Buffett built his reputation by buying undervalued stocks and holding them for the long haul. Recent 13-F filings reveal that Buffett is still using those strategies to find new opportunities. Wells Fargo and U.S. Bancorp were two of Buffett’s biggest buys in the first quarter, with both stocks trading at a discount to historical valuations. That means Buffett probably plans on holding for the long haul, giving regular investors a chance to invest with a true master who usually wins big.

P.S. — Like Warren Buffett, StreetAuthority’s Amy Calistri is a big proponent of value investing. She has one objective for readers of Stock of the Month: to provide one quality stock pick each month, with in-depth analysis in plain English that investors can understand. In fact, she just released a special presentation, “How to Beat the Stock Market… In Just 12 Minutes per Month,” that tells you more about her strategy. Go here to learn more.