Recently, Berkshire Hathaway announced its position in the third quarter of 2020. As of September 30, 2020, there are 49 stocks in the stock portfolio held by Mr. Buffett, with a cumulative market value of US $228.89 billion, equivalent to about RMB 1.5 trillion.
Compared with domestic institutional investors, Berkshire Hathaway has held more stable shares since its establishment, and the number of shares is small. From the industry of the latest 49 shares, Mr. Buffetts actions have been more obvious recently, especially in the third quarter, the industry distribution has changed greatly. Affected by the new crown epidemic, pharmaceutical stocks position doubled month on month. Although science and technology and gold holdings have been reduced, the market value of information technology is the first, accounting for more than 50%; followed by the financial industry; in addition, consumer goods and necessities are optional The market value of consumer goods positions accounted for 4%.
Long term holding of individual stocks by Mr. Buffett
Is the charm of the much watched Warren Buffett and his Berkshire Hathaway company really so great? Berkshire showed in the third quarter of this year that the company made $328 million a day, which means that Mr. Buffett can earn 2 billion yuan a day. Lets first look at the market performance of some long-term stocks held by jaffet. From the statistical results, it is not difficult to see that most of the stocks held in recent 10 years (2011.11.21-2020.11.20) have doubled, including Costco, American Express, Goldman Sachs Group, etc., of which the retail stocks Haoshi shares have increased nearly five times in recent 10 years.
With practical experience, Mr. Buffett proved his precise investment vision to investors. The reason why such a high return can be achieved is that Warren Buffett has long insisted on value investment, which is also the most classic investment theory of Graham, the father of value investment.
The share prices of individual stocks held by institutions are generally high
Berkshire Hathaways long-term firm holdings of stocks, on the one hand, the stock price is rising, the performance of such companies is stable growth, the valuation is also very reasonable, and the future growth expectations are strong; on the other hand, these companies belong to the group stocks of institutions and well-known investment companies, and the latter performs incisively and vividly in the A-share market.
Data bank statistics show that high price stocks in the A-share market are the key holding objects of institutional investors. The average number of holding institutions of more than 100 yuan shares is close to 80, of which the average holding institutions of companies with a stock price of more than 200 yuan is more than 100; the average number of holding institutions and holding funds of companies with a stock price of more than 300 yuan is more than 200; while the number of low-priced stocks, especially the number of stock holding institutions below 10 yuan, is less than 10, and the number of holding funds is not more than 3.
In fact, the stock price of these high price stocks was not high at the beginning of listing. Take Guizhou Maotai as an example, when it was listed in August 2001, the initial price was less than 32 yuan. From the perspective of annual trend, the stock price has been in the trend of continuous upward breakthrough. Just when investors think that Guizhou Maotai has been higher than the sky, its share price can continue to rise, and the target price given by institutions is also rising. Not only Maotai in Guizhou, but also the target prices of other high priced stocks are in a rising state, such as Wuliangye, gibbet, Changchun hi tech, etc.
Some investors may have doubts. Since Guizhou Maotais performance is so stable and its share price has been growing for a long time, why didnt Warren Buffett buy Guizhou Maotai? After consulting a circle of data and comparing its valuation, the author found that Guizhou Maotais valuation was in the middle position among liquor stocks. Some netizens interpreted it: Warren Buffett may not understand Chinas liquor culture, as for why he didnt buy Maotai or Maotai It has to do with its investment philosophy!
What is driving up the share prices of these companies? Performance, valuation, brand awareness, or what? According to the theory of Graham, the father of value investment, stock has its intrinsic value, and its price fluctuates around its intrinsic value. In other words, the reason why high price stocks can keep rising steadily is that their intrinsic value exceeds their current share price. Is this the truth?
Does Grahams theory apply to a shares
In Grahams investment philosophy, there is a view that he would rather hold a few excellent companies that he knows very well than a large number of mediocre companies. Compared with overseas capital markets, the A-share market has a much shorter time to establish. So does Grahams value investment theory apply to A-share market?
The author uses the simplest method to verify that for the 66 companies whose A-share market has been listed for more than 10 years, and the net profit growth rate in the past 10 years (2010-2019) is greater than 0, the share prices of 66 stocks have risen all over the past 10 years, more than 90% of the stocks have outperformed the market in the same period, and the proportion of more than 70% of the shares has doubled, and 11 stocks such as lichen precision, Aier Ophthalmology, Tongce medical and Guizhou Maotai have increased by more than 10% Times.
In addition, we can find that the higher the increase of net profit in the past 10 years, the higher the cumulative increase of stock price. The average increase of net profit in the past 10 years is more than 50%, and the average increase of stock price in recent 10 years is more than 9 times. Among them, the average growth rate of net profit in the past 10 years is more than 55%, and its stock price has accumulated more than 28 times in recent 10 years; the average growth rate of net profit is between 30% and 50%, and the average stock price has increased by more than 8% in recent 10 years However, the average increase of net profit is less than 10%, and the average growth rate of stocks in recent 10 years is less than twice.
To sum up, adhering to the investment strategy of value investment and firmly holding high-quality companies can obtain high returns, which may not appear in the short term; but in the long run, driven by the law of the stock price fluctuates around its intrinsic value, the stock price of listed companies will inevitably move towards its value.
Graham growth valuation test: 11 stocks have high future growth valuation
In fact, investors familiar with Graham know that there is a classic growth valuation formula in value investment theory: reasonable stock value = current earnings * (8.5 + 2 * expected annual growth rate), in which the expected annual growth rate refers to the companys future annual growth rate, and 8.5 represents a relatively reasonable valuation. Graham has proved the feasibility of the growth valuation with decades of practical experience At the same time, Graham also stressed that it would be very good for a company to maintain a growth rate of 8% per year. Based on this, he calculated a price earnings ratio of 24.5 times (8.5 + 2 * 8). However, there are a few companies that can maintain an 8% growth rate all the time, and the growth rate is the core of the stock. Therefore, Grahams investment view is that companies with a P / E ratio of less than 25 times are more suitable for investment.
Data bank optimizes the parameters of the above formula. The current earnings take the median of earnings per share in the past five years, and the expected annual growth rate takes the median growth rate from 2020 to 2022, in which the growth rate of net profit predicted by institutions from 2020 to 2022 is greater than 0, and the fluctuation range is less than 20% compared with the previous year (2021 vs. 2020, 2022 vs. 2021). After calculation, there are only 66 stocks whose current valuation is less than 25 times.
There is only one Lianmei holding company in the public utility industry. The latest closing price of the company is 13.9 yuan. According to the growth valuation, its intrinsic value is close to 20 yuan, and the premium is more than 45%. The growth rate of its predicted net profit from 2020 to 2022 is more than 15%. Guangfa Securities in the latest company research report shows that the heating season is fully opened, and Lianmei holdings is an underestimated leader of subdivided racetracks and maintains buy in u201dThe rating and the target price of 18.33 yuan are given, which shows that the reference value of growth valuation to calculate the intrinsic value is higher.
Value investment is not a myth, stable growth of performance is the core
So far, databao has roughly studied the feasibility of value investment from the perspective of data, and the theory of value investment is not a myth. After all, the A-share market has been established for a short time, and the theory of market efficiency hypothesis is not fully applicable. Even Warren Buffet, the God of stocks, cant operate 100% correctly. Therefore, we cant generalize in the pursuit of value investment and Grahams growth valuation formula.
The core driving force of stock price rising is still performance, but it is not completely dependent on performance. The companys valuation, environment and even brand awareness can become the cornerstone of the companys stable and long-term development. For a company with long-term high quality and recognized by the public, consumers and investors are willing to pay for the companys brand and stock, and it can also become the key holding object of domestic and international well-known institutions.
Source of this article: Data treasure editor in charge: Guo Chenqi_ NBJ9931