Warrant Buffet

Investment strategy

Slaoui Yassir
23/12/2021
Outline
• Warren Buffet
• History
• Investment strategy
• Thoughts on :
• Beta
• CAPM
• Diversification
• Risk
Warren Edward Buffett  is an American business
magnate, investor, and philanthropist. He is currently
the chairman and CEO of Berkshire Hathaway.

He is considered one of the most successful investors in

the world and has a net worth of over $102.1 billion as
of December 2021, making him the world's tenth-
wealthiest person.

Buffett has been the chairman and largest shareholder of

Berkshire Hathaway since 1970. He has been referred to
as the "Oracle" or "Sage" of Omaha by global
media. He is noted for his adherence to value investing,
and his personal frugality despite his immense wealth.
History

1930 1943 1946 1951

Warren Edward Buffett was Buffett enrolled at the He received his master's
Buffett was running his own University of Pennsylvania .He degree in economics at
born on August businesses as a stayed two years, moved to Columbia University, where
30, 1930, in paperboy and the University of Nebraska to he studied under economist
Omaha, selling his own finish up his degree, and Benjamin Graham and
Nebraska. horseracing tip emerged from college at age furthered his education at the
sheet. 20 with nearly $10,000 from New York Institute of Finance.
his childhood businesses.
History

1956 1969 1989 2006 2010

Dissolved Buffett Following Buffett made an Buffett and Gates
Buffet formed the
Partnership to Berkshire announcement announced they had
firm Buffett
focus on the Hathaway's that he would be formed The Giving
Partnership Ltd. in
development of significant giving his entire Pledge campaign to
his hometown of
Berkshire investment in fortune away to recruit more wealthy
Omaha. dissolved
Hathaway.  Coca-Cola, Buffett charity,committing individuals for
in 1969.
became director 85 percent of it to philanthropic causes. 
of the company the Bill and 
Melinda Gate
 Foundation.
History
2013
Buffett purchased H. J. Heinz with
private equity group 3G Capital for $28
billion. Later additions to the Berkshire
Hathaway stable included battery maker
Duracell and Kraft Foods Group, which
merged with Heinz in 2015 to form the
third-largest food and beverage
company in North America.
2016 2017
In May 2017 Buffett revealed that he had begun
Buffett launched
selling some of the approximately 81 million shares
Drive2Vote, a
he owned in IBM stock, noting that he did not value
website aimed
the company as highly as he did six years earlier.
at encouraging
Following another sale in the third quarter, his stake
people in his
in the company dropped to about 37 million shares.
Nebraska
On the flip side, he increased his investment in
community to
Apple by 3 percent and became Bank of America's
exercise their
largest shareholder by exercising warrants for 700
right to vote.
million shares. Early the following year, he added
more Apple shares to make it Berkshire Hathaway's
largest common stock investment.
Warrant Buffet
• Investment strategy

• Buffett follows the Benjamin Graham school of value investing. Value investors look for

securities with prices that are unjustifiably low based on their intrinsic worth.

• Warren Buffett finds low-priced value by asking himself some questions when he evaluates
the relationship between a stock's level of excellence and its price.
• Company Performance
• Company Debt 
• Profit Margins
• Is the Company Public?
• Commodity Reliance
• Is it Cheap?
Warren Buffett

• Buffett avoids investments he doesn't understand well. That's the

main reason you won't find many high-growth technology companies
or biotech stocks in Berkshire Hathaway's portfolio. They're not
necessarily bad businesses or overvalued, but Buffett knows where
his stock-picking strengths lie.
Warren buffet’s thoughts: Beta

The beta is a measure of how an individual asset

moves when the overall stock market increases or
decreases. Thus, beta is a useful measure of the
contribution of an individual asset to the risk of the
market portfolio when it is added in small quantity.
Warren buffet’s thoughts: Beta

Warren Buffet says that “Beta, the measurement of a stock's volatility,

is not a measurement of riskiness”
Although many investors are taught that high beta stocks have more
potential for gain but also a higher risk of loss due to their volatility,
Buffett disagrees.
Warren buffet’s thoughts: CAPM

Capital asset pricing model (CAPM) is an idealized

portrayal of how financial markets price securities and
thereby determine expected returns on capital
investments. The model provides a methodology for
quantifying risk and translating that risk into estimates
of expected return on equity.
Warren buffet’s thoughts: CAPM

Our Graham & Dodd investors do not discuss beta, the capital asset

pricing model or covariance in returns among securities. Most of them
would have difficulty defining these terms. The investors simply focus
on two variables: price and value.
Warren buffet’s thought: Risk
• Risk is any uncertainty with respect to your investments that has the
potential to negatively affect your financial welfare.
He says that risk comes from not knowing what you’re
doing so wide diversification is only required when
investors are ignorant. You only have to do a very few
things in your life so long as you don't do too many
things wrong.
Warren buffet’s thoughts: Diversification

Diversification is a technique that reduces risk by allocating

investments across various financial instruments, industries,
and other categories. It aims to maximize returns by investing
in different areas that would each react differently to the
same event.
Warren buffet’s thoughts: Diversification

Buffett has frequently warned investors that diversification can

be damaging to returns. "Diversification is protection against
ignorance. It makes little sense if you know what you are
doing."
 Sources:

• https://mazorsedge.com/lessons-from-warren-buffett-warren-buffett-disagree
s-with-beta-as-a-measurement-of-risk/

• https://en.wikipedia.org/wiki/

• https://www.biography.com/business-figure/warren-buffett

• https://www.azquotes.com/quote/1259463

• https://finance.yahoo.com/news/warren-buffett-risk-two-main-161830380.ht
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