Buffett Beyond Value: Why Warren Buffett Looks to Growth and Management When Investing

Preface

This book is for everyone with a serious interest in learning about stock market investing using principles espoused by Warren Buffett. Just over 20 years ago, while teaching at the Wharton School, I stumbled upon an essay by Warren Buffett that motivated me to carefully investigate his investment style.^[1] I was intrigued when I realized that there was a fundamental difference between Buffett's attitude toward investing and the academic approach. While academics generally anchor on the impossibility of making above-average returns, Buffett proposes just the opposite. He argues that with a careful study of company fundamentals and management quality, investors definitively can earn above-average returns. His outstanding long-term record supports his claim. When faced with Buffett's record, most academics either dismiss it as an outlier or brand him a genius who cannot be copied or explained. I wanted to know if there was a systematic way of understanding and emulating his investment philosophy.

Most authors, including academics, characterize Buffett as a value investor. Buffett is not just a value investor — at least not in the popular sense that the "value" moniker is used. Buffett's publicly traded company, Berkshire Hathaway, has grown at an annualized rate of about 20 percent in assets, revenues, net worth, and market value for 44 years. His performance is closer to what would be expected from a successful growth investor. Unlike other businessmen who may have also amassed ...