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Lucky hands ?: Secret revealed: Economists examine Buffett’s recipe for success | message


• Investors concerned about how Berkshire would fare without Buffett
• Study examines Buffett’s recipe for success
• Research-derived funds can compete with Berkshire

Star investor Warren Buffett is certainly a great role model for one or the other investor. After all, the entrepreneur has amassed an incredible fortune in his long career with the help of his value investing strategy and has become one of the richest people in the world. He has always successfully managed the fortunes of his investment vehicle Berkshire Hathaway and guided it through one or the other crisis.

But the oracle of Omaha is now 90 years old and there are investors who have concerns about whether Berkshire will maintain its success without the star investor when the time comes. After all, it is the stock market guru’s handpicked stock selection that leads to the annual returns. However, Mark Hulbert gives the all-clear in his latest MarketWatch column. In his opinion, investors can rest assured and continue to assume that the holding company will outperform even without Buffett.

“Buffett’s Alpha” study in search of Buffett’s secret of success

The reason? The secret of the stock market guru’s success has been deciphered and can be adjusted accordingly. Hulbert reports on a study from 2012 called “Buffett’s Alpha”, which was jointly written by economic experts Andrea Frazzini, David Kabiller and Lasse H. Pedersen. The thesis explores the question of Buffett’s success to date: “Every investor has an opinion on how Buffett did it, but we look for the answer using empirical analysis […]It showed that the selection of stocks with a low price-to-book ratio, low volatility and companies that show above-average growth and pay high dividends has contributed to the success of the stock market expert. In other words: Buffett bets on stocks that are safe, cheap and of high quality.

Another secret of Buffett’s success is that he would use leverage to increase his returns: “Buffett has driven his returns through the use of levers, and he has stuck to a good strategy for a very long time, and has also had harder times survived where others might have been forced to make an emergency sale or a career change “. The experts have incorporated the knowledge of Buffett’s various success factors into a complex formula with which they can determine stocks that meet the criteria of the oracle of Omaha.

The AQR Fund – in Buffett’s footsteps, without Buffett

The study authors ultimately used this to set up their own investment fund that follows the same principles Buffett’s principles without re-adjusting his portfolio: the AQR Large Cap Defensive Style Fund, which was launched in July 2012. According to Hulbert’s information, he already had a stake in the food manufacturer Kraft Heinz, and a little later the star investor got into the food manufacturer on a large scale. Since its inception, the AQR fund has shown impressive performance, at times dwarfing that of Berkshire Hathaway.

Investors shouldn’t expect the fund to consistently beat the investment holding company in the future, “but if we assume that the future behaves like the past, the fund (like anyone who follows the study) will for a long time View at least correspond to the performance of Berkshire – with or without Buffett “.

Martina Köhler / editorial team

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