Warren Buffett has always been identified as a “value investor” but those who have studied his investing career know that it is not so easy to pigeonhole his true investing style.  This should not come as a particular surprise since it is obvious that an investing outlier such as Mr. Buffett must have applied unique insights over the years.  According to Prem Jain, author of Buffett Beyond Value, Mr. Buffett’s true investing style is “value + growth”.  In other words, the goal is to find investments that offer solid prospects of future growth while also providing substantial downside protection.

Prem Jain published a brief article today summarizing his views on Warren Buffett’s investing style.  Here is a brief excerpt:

His style has evolved over the years and incorporated strategies of growth investing. For this reason — having taught his principles for 20 years and benefited from them personally, and as author of an exploration of his investing principles called “Buffett Beyond Value” — I call him a “value + growth” investor rather than a value investor alone.

For more information regarding Prem Jain’s view of Warren Buffett’s unique investing style, please read our book review of Buffett Beyond Value and our exclusive interview with the author.

For more information regarding the evolution of Mr. Buffett’s investing style, please see our essay From Cigar Butts to Business Supermodels which is part of the introduction to The Rational Walk’s widely acclaimed Berkshire Hathaway Briefing Book.

Disclosure:  The author of this article owns shares of Berkshire Hathaway.

Prem Jain: Buffett is a ‘Value + Growth’ Investor
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2 thoughts on “Prem Jain: Buffett is a ‘Value + Growth’ Investor

  • July 29, 2010 at 10:13 am

    Buffett has long taught that growth vs. value is a false distinction. As Seth Klarman has stated, “At some price, an asset is a buy, at another it’s a hold, and at another it’s a sell.”

    The key is to figure out the net present value of the future cash flows you will receive for the funds you layout. It doesn’t matter if it is a growth or value company, it matters which investment is cheaper, i.e. where you get more for your money. Buffett has generally found more value in growth companies earning a high return on invested capital.

    If you’re interested, I have an example on my blog that Buffett gave at the 1992 Berkshire Shareholder meeting to illustrate how to evaluate a growth and value investment. http://gregspeicher.com/?p=712

  • July 29, 2010 at 10:20 am

    Agreed regarding the growth vs. value point. For those who listen carefully to Buffett, he has made this point clear for a long time, but I can’t tell you how many people I’ve met who think Buffett is just a second version of Ben Graham. Jain’s book does a really good job of explaining why the growth/value debate is the wrong one.

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