Tag Archives: Warren Buffett

Contrasting Buffett’s New & Old Value Investing Styles — Cigar Butt vs. High Quality.

Warren Buffet’s strategy has changed over the years because the funds he manages have grown, according to Professor George Athanassakos article in Canada’s Globe & Mail. Both the old and new Buffett approaches are types of value investing but they differ in key ways.  The early-career Buffet followed the advice of his professor and the father of value investing, Ben Graham.  He picked stocks with low P/E (or P/B) ratios that, upon closer evaluation, were found to have an intrinsic value at least a one-third higher than the stock price.  Choosing such “cigar butt” stocks is an opportunistic approach suitable for short-term investment, and is the classic meaning of “value investing.”

With greater assets under management, Athanassakos writes, Buffet has moved to a different form of value investing.  He buys larger companies with higher than typical P/E (or P/B) values that “possess significant competitive advantages that are sustainable in the long term.”  This leads to Buffet’s well-known long holding periods because, given a sustainable competitive advantage, “chances are that their intrinsic value will be ahead of the stock price” over the long term as well. According to Athanassakos, value investing strategies can come in “several variations”, but the deep value, cigar butt style offers investors “offers many more profitable opportunities than the high quality, competitive-advantage-driven investing approach.”

Value Investing Advice: Take Time Out for “Calm Contemplation”

Value investor and author Guy Spier discusses his philosophy on investing, which includes taking a long term perspective, not reacting to news and pundit predictions and keeping an arm’s length away from Wall Street (Spier lives in Zurich). Mr. Spier’s views are greatly influenced by that of Warren Buffett. He believes that Buffett, who lives in Omaha and works out of a simple office building “could not be further away from the vagaries of the stock market”. When markets are volatile, Spier says, investors would be better off not making any changes to their investment portfolios and rather engage in “calm contemplation” activities — going for a walk, reading or doing something that takes their mind off of the markets.

Spier drives home his point by referencing a recent Fidelity study, which “found that the portfolios of dead people perform better than live people. It is an astonishing result—but one that follows from the simple rule that for the vast majority of the time, the right thing to do with a stock portfolio is absolutely nothing—something that dead people are better at accomplishing than live people.”

Why PCP — And Other Industrials — Are Buffett’s Kind Of Stocks

Warren Buffett made headlines recently with Berkshire Hathaway’s acquisition of Precision Castparts. And in his latest Forbes.com column, Validea CEO John Reese talks about why the firm is a “Buffett-esque” company.

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Don’t Be Afraid To Quickly Sell A Bad Stock — Buffett Does

Warren Buffett says that his favorite holding period for a stock is forever. But in his latest column for Canada’s Globe and Mail, Validea CEO John Reese says that good investors, including Buffett, are willing to sell stocks in shorter periods, too.

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Tech Plays Offering More Value Than Google

Google grabbed headlines recently when the already-giant technology stock soared 16% in a single day. But in his latest for Forbes.com, Validea CEO John Reese says his Guru Strategies are finding better buys elsewhere in the tech sector.

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When It Comes To Tech Investing, Don’t Overlook The Old Guard

In the tech sector, new companies with exciting stories often get the bulk of the attention — and the bulk of investors’ dollars. But in a recent interview with Canada’s Business News Network, Validea CEO John Reese says he’s finding more opportunities in older, less glamorous tech plays.

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Lessons From History’s Greatest Investing Minds

What lessons can history’s best investment gurus teach us? Be resilient, unemotional, and cautious, to name three, says author William Green, who interviewed nearly three dozen investing legends for his new book.

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