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Precisely by being an investor in the old sense, the sense of being a businessman who allocates capital. He buys entire companies based on his analysis of their

by yborg 10y ago

Precisely by being an investor in the old sense, the sense of being a businessman who allocates capital. He buys entire companies based on his analysis of their financials and management, and then operates them as businesses. He tries to take stakes in companies in deals where he holds an advantage, such as his Goldman Sachs investment. I don't consider him a stock picker, he's a very shrewd businessman.

billmalarky 10y ago
In that sense his strategy is more aligned with private equity, but at the public scale...
nstj 10y ago
Buffett does very little business as you describe. He takes no real active role in the companies which he purchases and definitely doesn't "operate" them. The advantage he had in the GS preferred stock offering in 2008 was his ability to provide liquidity and his name - if GS told people that Warren was investing in them then it was a real vote of confidence.
akiselev 10y ago
He's absolutely a stock picker, not a businessman. That's the definition of value investing, which is his self proclaimed mode of investment. He looks for undervalued (by the stockmarket) companies with good cash flow, competent management, room to grow, etc. and waits until the market price catches up to his expectations. Meanwhile, he leaves the management alone to do their best work while reinvesting the cash flow (from dividends) into other undervalued companies. Most financial institutions were probably undervalued after the 2008 collapse so if Buffet saw an undervalued cash flow positive business, that's why he invested.
- namlem 10y ago
  Berkshire Hathaway is more involved and hands on than mutual funds. They don't really micromanage, but they do at least a little bit of basic management.
adventured 10y ago
Buffett made most of his money in deals that were nothing like the Goldman Sachs arrangement. Very few of his big returns provided him any special advantage like that. His biggest returns for the first 3/4 of his adult life involved him going against the market when equities were out of favor and scooping up extremely large positions in the likes of The Washington Post, GEICO, American Express, Wells Fargo and Coca Cola. His extraordinary history of stock picking is what enabled him to begin buying entire substantial businesses in the first place. The stock picking is what accumulated the capital necessary to buy Blue Chip Stamps and See's Candies. The Buffett partnerships for example were not built around buying up entire businesses and operating them for decades to reinvest the cash flow, and yet his returns were dramatic - regularly stomping the Dow - during those years precisely because he was such a great stock picker.

by yborg 10y ago

billmalarky 10y ago

In that sense his strategy is more aligned with private equity, but at the public scale...

nstj 10y ago

Buffett does very little business as you describe. He takes no real active role in the companies which he purchases and definitely doesn't "operate" them. The advantage he had in the GS preferred stock offering in 2008 was his ability to provide liquidity and his name - if GS told people that Warren was investing in them then it was a real vote of confidence.

akiselev 10y ago

He's absolutely a stock picker, not a businessman. That's the definition of value investing, which is his self proclaimed mode of investment. He looks for undervalued (by the stockmarket) companies with good cash flow, competent management, room to grow, etc. and waits until the market price catches up to his expectations. Meanwhile, he leaves the management alone to do their best work while reinvesting the cash flow (from dividends) into other undervalued companies. Most financial institutions were probably undervalued after the 2008 collapse so if Buffet saw an undervalued cash flow positive business, that's why he invested.

namlem 10y ago
Berkshire Hathaway is more involved and hands on than mutual funds. They don't really micromanage, but they do at least a little bit of basic management.

adventured 10y ago

Buffett made most of his money in deals that were nothing like the Goldman Sachs arrangement. Very few of his big returns provided him any special advantage like that. His biggest returns for the first 3/4 of his adult life involved him going against the market when equities were out of favor and scooping up extremely large positions in the likes of The Washington Post, GEICO, American Express, Wells Fargo and Coca Cola. His extraordinary history of stock picking is what enabled him to begin buying entire substantial businesses in the first place. The stock picking is what accumulated the capital necessary to buy Blue Chip Stamps and See's Candies. The Buffett partnerships for example were not built around buying up entire businesses and operating them for decades to reinvest the cash flow, and yet his returns were dramatic - regularly stomping the Dow - during those years precisely because he was such a great stock picker.