Author Topic: Buffett quote on small growth companies  (Read 7023 times)

LR1400

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Buffett quote on small growth companies
« on: September 13, 2016, 12:42:31 PM »
I recently read a quote, supposedly from Buffett, where he states he would buy smaller, young, newly public companies were he a young man. This was due to their potential for long term earnings growth.

I thought I had saved it but I didn't. The topic he was discussing was related to young investors and investors with smaller sums as well as qualitative versus quantitative investing.

Thanks for the help.


CorpRaider

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Re: Buffett quote on small growth companies
« Reply #1 on: September 13, 2016, 02:21:42 PM »
Sounds more like something Munger said fairly recently, but I don't have a quote or source.  He does tend to "rift fantastique"/bullshit a lot more than the big chairman.

blainehodder

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Re: Buffett quote on small growth companies
« Reply #2 on: September 13, 2016, 03:20:23 PM »
https://old.ycombinator.com/munger.html

Quote
How do you get into these great companies? One method is what I'd call the method of finding them small get 'em when they're little. For example, buy Wal-Mart when Sam Walton first goes public and so forth. And a lot of people try to do just that. And it's a very beguiling idea. If I were a young man, I might actually go into it.
« Last Edit: September 13, 2016, 03:26:29 PM by blainehodder »

LR1400

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Re: Buffett quote on small growth companies
« Reply #3 on: September 13, 2016, 04:02:56 PM »
https://old.ycombinator.com/munger.html

Quote
How do you get into these great companies? One method is what I'd call the method of finding them small get 'em when they're little. For example, buy Wal-Mart when Sam Walton first goes public and so forth. And a lot of people try to do just that. And it's a very beguiling idea. If I were a young man, I might actually go into it.

That's it!

Thanks.

LC

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Re: Buffett quote on small growth companies
« Reply #4 on: September 13, 2016, 04:23:05 PM »
Be careful how you interpret the quote:

Quote
And it's a very beguiling idea. If I were a young man, I might actually go into it.

Quote
be·guile
bəˈɡīl/
verb
gerund or present participle: beguiling
1.
charm or enchant (someone), sometimes in a deceptive way.
"Lethargy bordering on sloth remains the cornerstone of our investment style."
----------------------------------------------------------------------------------------
brk.b | cash

wachtwoord

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Re: Buffett quote on small growth companies
« Reply #5 on: September 13, 2016, 04:25:24 PM »
So the young man in the quote should be read as naive ;)
"Beware of he who would deny you access to information, for in his heart he dreams himself your master"

scorpioncapital

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Re: Buffett quote on small growth companies
« Reply #6 on: September 13, 2016, 05:18:52 PM »
Perhaps he's referring to the difficulty in finding the next winner early, hence the deceptive part. If you read Philip Fischer, it's exactly what he's advocating, not necessarily IPO, but a real full on effort to think about and find the next 10 to 100 bagger growth stock, if not at the baby stage, at least at the junior stage.


Investor20

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Re: Buffett quote on small growth companies
« Reply #7 on: September 13, 2016, 06:12:17 PM »
I thought the argument for buying smaller companies is lack of competition from fellow investors.  Buffett of course talks about fat wallet being the enemy of superior investment results. 

Buffett specifically said he wont buy Facebook or an IPO for that matter. Below is the link

http://money.cnn.com/2012/05/06/news/buffett-facebook/

"The idea that something coming out...that's being offered with significant commissions, all kinds of publicity, the seller electing the time to sell, is going to be the best single investment that I can make in the world among thousands of choices is mathematically impossible," said Buffett

To me the most important criteria is "seller electing the time to sell".  By any measure Facebook management would know lot more than I can about the Facebook prospects.

LR1400

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Re: Buffett quote on small growth companies
« Reply #8 on: September 13, 2016, 07:33:30 PM »
Perhaps he's referring to the difficulty in finding the next winner early, hence the deceptive part. If you read Philip Fischer, it's exactly what he's advocating, not necessarily IPO, but a real full on effort to think about and find the next 10 to 100 bagger growth stock, if not at the baby stage, at least at the junior stage.

I need to read Fischer. I have one on my shelf but I've only skimmed it.

rb

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Re: Buffett quote on small growth companies
« Reply #9 on: September 13, 2016, 07:46:50 PM »
I thought the argument for buying smaller companies is lack of competition from fellow investors.  Buffett of course talks about fat wallet being the enemy of superior investment results. 
Not really anymore, there's so much PE money out there chasing small cos, that it's probably easier to find big cos cheaper. As surprising as that may sound.