Inside the Investments of Warren Buffett

June 13, 2016
Warren Buffett’s investment acumen is frequently celebrated but less often analyzed, and those analyses are rarely as thorough or dispassionate as this one from debut author Lu, a portfolio manager at Shareholder Value Management. Lu has selected 20 companies—some obscure (the Sanborn Map Company), some household names (IBM, Coca-Cola)—in which Buffett obtained an interest between 1958 and 2011. Through historical research and financial statement analysis, Lu has attempted to divine what Buffett saw in them. Some common themes emerge. Buffett preferred, as he quipped, to buy a wonderful company at a fair price rather than a fair company at a wonderful price. He also looked for transparency; consistent earnings growth or compounded returns; good management; and opportunities to outperform the stock market through undervalued securities, “workouts,” or “control situations.” One of Lu’s conclusions is that it is indeed possible for ordinary investors to replicate Buffett. She reveals a cautious, methodical investor who sought businesses with structural advantages that grew over time and who also, in demanding a “margin of safety,” seldom risked capital. For serious investors and analysts eager to transcend the cult of personality around Buffett and discern what actually makes him great, this study comes highly recommended.

August 1, 2016

Portfolio manager Lu's book answers the questions readers may have about making potential investments into a company. Containing 20 cases that span Warren Buffett's early investments into recent years, it should not be considered as another document of Buffett's works, but is to be used as an investment guide. Each of the cases contains all relevant financials, which readers can apply to understand what factors were behind Buffett's investment decisions as well as tools to use when deciding to invest. These include examining the financials and analyzing the operating segments of the company and the competitive environment in which any subbusinesses operate. It can be read alongside titles such as Benjamin Graham's The Intelligent Investor. Lu's book presents actual situations that investors would face when grappling with whether to make an investment and lessons learned from each choice. VERDICT Recommended for any investor or student seeking financial expertise.--Adesh Rampat, Port of Spain, Trinidad and Tobago

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