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This is an over simplistic view. Simplify the terms so much and you get garbage in, so obviously garbage out. The russell 1000 value index is quantitative only

by snird 6y ago

This is an over simplistic view. Simplify the terms so much and you get garbage in, so obviously garbage out. The russell 1000 value index is quantitative only and tries hard to define "cheap" stocks by different measures. Value investing in the real world, especially when talking about Buffet, is heavily reliant on qualitative analysis. How else would Apple, Buffet's biggest holding, will be considered a value investment? The title therefore is completely wrong. A good title would be: "Russell 1000 value index performed worse then their growth index recently"

throwaway5752 6y ago
First, Berkshire Hathaway holds AAPL. Ted or Todd probably initiated the position, not Warren Buffett. Second, they are up about 300% on the stake. That equates to a P/E of 10x based on ttm earnings on AAPL and their basis. At the time, I think AAPL had a pretty modest valuation, also. The theory is that phones were cyclical and that service income would not offset the loss of income from devices. AAPL was widely discussed as a value investment around that time (as was Facebook).
- MrPowers 6y ago
  You're right. In September 2016, Apple's market cap was around 500 billion with 45 billion of profit. Apple is currently at 1.83 trillion with 58 billion of profit. The stock price has tripled, but the profit has not. Apple's fundamental value metrics were significantly different a few years ago.
- divbzero 6y ago
  Todd or Ted was the first to buy Apple shares for Berkshire, but Warren Buffett made the decision for the bulk of Berkshire’s current stake in Apple. The $35 billion Apple investment (worth more now) [1] is larger than what Todd or Ted manage (about $13 billion each as of last year) [2]. Buffett has also commented publicly on the rationale behind his decision to own Apple. [1]: https://www.cnbc.com/2020/07/16/warren-buffett-reaps-40-billion-from-giant-apple-stake-since-march-bottom.html https://www.cnbc.com/2020/07/16/warren-buffett-reaps-40-bill... [2]: https://www.cnbc.com/2019/02/25/warren-buffett-says-berkshire-stock-managers-weschler-and-combs-have-trailed-the-sp-500.html https://www.cnbc.com/2019/02/25/warren-buffett-says-berkshir...

by snird 6y ago

throwaway5752 6y ago

First, Berkshire Hathaway holds AAPL. Ted or Todd probably initiated the position, not Warren Buffett. Second, they are up about 300% on the stake. That equates to a P/E of 10x based on ttm earnings on AAPL and their basis. At the time, I think AAPL had a pretty modest valuation, also. The theory is that phones were cyclical and that service income would not offset the loss of income from devices. AAPL was widely discussed as a value investment around that time (as was Facebook).

MrPowers 6y ago
You're right. In September 2016, Apple's market cap was around 500 billion with 45 billion of profit. Apple is currently at 1.83 trillion with 58 billion of profit. The stock price has tripled, but the profit has not. Apple's fundamental value metrics were significantly different a few years ago.
divbzero 6y ago
Todd or Ted was the first to buy Apple shares for Berkshire, but Warren Buffett made the decision for the bulk of Berkshire’s current stake in Apple. The $35 billion Apple investment (worth more now) [1] is larger than what Todd or Ted manage (about $13 billion each as of last year) [2]. Buffett has also commented publicly on the rationale behind his decision to own Apple. [1]: https://www.cnbc.com/2020/07/16/warren-buffett-reaps-40-billion-from-giant-apple-stake-since-march-bottom.html https://www.cnbc.com/2020/07/16/warren-buffett-reaps-40-bill... [2]: https://www.cnbc.com/2019/02/25/warren-buffett-says-berkshire-stock-managers-weschler-and-combs-have-trailed-the-sp-500.html https://www.cnbc.com/2019/02/25/warren-buffett-says-berkshir...