Author Topic: Buffett quote on small growth companies  (Read 6940 times)

Dynamic

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Re: Buffett quote on small growth companies
« Reply #20 on: September 15, 2018, 07:53:01 PM »
I'm pretty much the same LC, but tending towards GARP and highly concentrated positions. This has met my goals and my tax consequences are minimal even if I do change horses now and again.

High growth is beguiling but I'd find it difficult to do. The best approach is perhaps for things like Amazon where you adjust some expenses like R&D and advertising to amortize them over their expected life. Adjusted earnings then are much higher and valuation doesn't look so stretched near their low points. The beauty is that you only need a moderate initial position to have a meaningful impact if it becomes a 10+ bagger. It's something I'm looking at with a view to taking advantage of temporary price declines, but I'll still meet my goals with GARP if I miss such an opportunity.


Shane

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Re: Buffett quote on small growth companies
« Reply #21 on: September 24, 2018, 09:06:20 AM »
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.

We all know FB went on to deliver tremendous returns following the IPO.  I believe PE/VC funds have a finite life on most of their assets and don't really have the choice of when to sell in some circumstances.