Buffett’s Patient Approach to Investing

In a recent article for Forbes, Validea CEO John Reese discusses Berkshire Hathaway’s current stockpile of cash and how Buffett, who Reese refers to as a “Patient Investor”, approaches both choosing opportunities and making investments with care.

Reese cites a Bloomberg article that describes Buffett’s investing principle: “There’s no need to chase deals,” it says, adding that Buffett likens investing to hitting a baseball. “Don’t swing at one that’s out of your comfort zone.”

Using stock screening models he created based on the philosophies of Buffett and other market greats, Reese identifies the following high-scoring stocks:

  • Credit Acceptance Corp. (CACC) offers financing programs that enable automobile dealers to sell vehicles to consumers, and earns high marks for earnings predictability and return-on-equity.
  • Sherwin Williams (SHW) is engaged in the development, manufacture, distribution and sale of paint, coatings and related products. The company is favored for its ability to pay off debt with earnings within two years as well as average annual earnings growth.
  • NetEase (NTES) is a technology company that operates an interactive online community in China, and scores well due to earnings predictability and long-term growth in earnings-per-share. The debt-free balance sheet and long-term average return-on-equity add interest.
  • Banco Macro SA (BMA) is an Argentina-based financial institution that offers traditional banking products and services favored for its predictable and consistently growing earnings as well as long-term average return-on-equity.