Tags: Warren Buffett | Mark Hulbert | Stocks | Buying

Hulbert: Stocks Buffett Might Buy if He Was Starting His Career Today

By    |   Thursday, 07 May 2015 08:08 AM

Have you ever thought about which stocks legendary investor Warren Buffett would purchase if he was starting his career now and focusing on a 50-year time horizon?

If so, MarketWatch columnist Mark Hulbert has some answers for you.

He made some selections based on a recent study by the National Bureau of Economic Research and AQR Capital Management. They came up with a formula to find stocks that could replicate Buffett’s returns of the past 50 years.

Three key elements include "safety, as measured by low historical volatility and low beta;
cheap, as measured by low price-to-book ratios, and high quality," measured by profits, stability, growth and dividends, Hulbert writes.

And don't overlook leverage. The study states that Buffett utilizes a leverage factor of about 1.6-to-1. So you'd have to copy that to match his performance, Hulbert says.

He came up with 12 stocks, including:
  • American Eagle Outfitters,
  • Haverty Furniture,
  • Kohl’s,
  • Owens & Minor,
  • Rent-A-Center and
  • Scholastic.

Elsewhere on the Buffett front, he has attained the status of America's friendly uncle, overlooking financial markets and the economy with benign wisdom.

But that doesn't quite fit reality, explains New York Times columnist Andrew Ross Sorkin.

He notes that Buffett, CEO of Berkshire Hathaway, has no more desire than any other corporate chieftain to keep unneeded workers on board.

"I don’t know of any company that has a policy that says, ‘We’re going to have a lot more people than we need,'" Buffett told a questioner at Berkshire Hathaway's annual meeting Saturday.

"Mr. Buffett’s avuncular ways often disguise another truth: he isn’t always a cuddly teddy bear," Sorkin writes. "While he says he prefers a hands-off management approach, he runs a pretty lean organization."

Buffett's take: "we do have some businesses where we probably have more people than we need, and I don’t do anything about it. But that doesn’t mean that I endorse it. I basically tolerate it."

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Have you ever thought about which stocks legendary investor Warren Buffett would purchase if he was starting his career now and focusing on a 50-year time horizon?
Warren Buffett, Mark Hulbert, Stocks, Buying
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2015-08-07
Thursday, 07 May 2015 08:08 AM
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