Research Perspectives – November 2025

Theme and Background

This chapter uses Warren Buffett’s retirement from Berkshire Hathaway (BRK) as a starting point to distill three investment lessons the author considers “most underappreciated.” The report aims to offer insights for investors in the current market environment by reviewing Buffett’s early methods, the evolution of his investment philosophy, and key decisions. The author believes the current market resembles the “high-valuation, top-heavy” landscape of the early 1970s, presenting significant opportunities for long-term investors.

Core Thesis

The author’s central investment argument is: The key to investment success lies in a disciplined, consistent research process, not in relying on short-term market information or popular strategies. The report emphasizes three counterintuitive lessons:

1. The “Start with A” Grind: Buffett’s early success stemmed from systematically studying all listed companies, not from taking shortcuts.

2. The Forced Evolution of Methodology: Buffett’s shift from 85% Graham + 15% Fisher toward more full-company ownership was an inevitable result of managing growing assets (from roughly $100 million to about $20 billion), not a failure of his stock-picking approach.

3. The Right Timing for Share Buybacks: Most management teams destroy value by repurchasing shares at high prices, while buying back at low prices (as described in Buffett’s 1984 shareholder letter) is the highest-return form of capital allocation.

Key Arguments and Data

• Research Process: In the 1990s, Buffett advised young investors to “start with A” and study all 27,000 U.S. listed companies. He spent 80-90% of his time reading early on, with the remainder on brief phone calls and meetings. The report argues that despite modern computers, disciplined research remains the best way to generate investment ideas, superior to “hearsay” investing.
• Scale and Method Evolution: In 1969, Buffett described himself as “15% Phil Fisher and 85% Benjamin Graham.” At that time, he managed roughly $100 million in assets, equivalent to about $20 billion today based on the S&P 500’s roughly 10% compound annual growth rate. To accommodate this growth, he was forced to shift from stock picking to more 80-100% full-company ownership, not because his method failed.
• Share Buyback Lesson: The report cites the 1984 BRK shareholder letter, noting that most management teams repurchase shares at high prices to “dilute” or “meet short-term targets,” thereby destroying value. The correct approach is to buy back shares when the price is below intrinsic value, which represents the “lowest-risk, highest-return” form of capital allocation.
• Apple Investment Case: Buffett considered Apple an “extraordinary company” in 2012-2013 but deemed it uninvestable. By 2017, he changed his view, seeing Apple more as a consumer goods company. BRK bought Apple when its P/E was 10-15 times free cash flow and recently sold. The author believes the reason is that Apple’s stock was trading “significantly above its fair value.”
• Current Market Comparison: The report argues that the current market resembles the “high-valuation, top-heavy” environment of the early 1970s, which is full of opportunities for long-term investors.

Companies/Assets Involved

Investment Implications

• Adhere to Research Discipline: Investors should emulate Buffett’s systematic “start with A” research method, spending 80-90% of their time on reading and deep analysis rather than chasing market trends.
• Understand the Fit Between Scale and Method: As the scale of assets under management grows, stock-picking methods may need adjustment, but core value investing principles (e.g., margin of safety, long-term holding) remain valid. In the current market, small-cap companies may offer more opportunities.
• Focus on the Quality of Share Buybacks: Investors should be wary of companies that repurchase shares at high prices to “dilute” or “meet short-term targets” and instead seek management teams that demonstrate capital allocation discipline by buying back shares decisively when prices are below intrinsic value.
• Position in “BRK-like” Companies: The report explicitly recommends Graham Holdings (GHC), White Mountains Insurance (WTM), and Exor, arguing that they resemble BRK in business model, management culture, and capital allocation. With current P/EV valuations in the 60%+ range, their prices are attractive. These companies can protect capital while achieving long-term growth.