Warren Buffett Invested In These 2 Growth Stocks Despite His Long History as a Value Investor

Warren Buffet is one of the most successful investors of all time, but his reputation of building up his wealth as a value investor sometimes gets misconstrued.

While it’s true that Buffet and Berkshire Hathaway, the holding company that he leads, focus on intrinsic value — meaning the present value of all future cash flows — that doesn’t mean they only invest in value stocks, such as Coca-Cola, Chevron and Bank of America.

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Some growth stocks have also proven to be boons for the Oracle of Omaha.

In fact, Berkshire Hathaway’s top stock as a percentage of its equity portfolio is Apple, and the company also holds 10 million shares of Amazon stock, although that’s a much smaller slice of Berkshire’s portfolio.

GOBankingRates broke down why Buffett invested in these growth stocks despite being a value investor for decades.

Even though these are normally categorized as growth stocks, however, they arguably still align with Berkshire’s, Buffet’s and his late business partner Charlie Munger’s philosophies, said Charles Rinehart, chief investment officer at Johnson Investment Counsel.

“Those investments don’t seem too out in left field,” he said. “Some sources of value maybe just escape a normal price-to-earnings [P/E] ratio.”

Rather than getting too caught up in value in terms of metrics like P/E ratios, these legendary investors have talked about how businesses can create value for shareholders by having durable, competitive advantages, along with moat and pricing power, said Rinehart.

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So, while Apple and Amazon are generally considered growth stocks, in the sense that their current stock values generally reflect expectations for substantial future growth, these companies arguably have lots of qualities that some more traditional value stocks have, such as being staples in so many people’s daily lives.

“They’re not the fringe driver of growth in the economy anymore,” said Rinehart. “And they both extend in ways that enable a lot of other businesses to function.”

For example, Amazon’s AWS provides the cloud computing backbone for so many corporations, and Apple has a huge ecosystem of third-party apps running on its App Store, he added.

“So I don’t think that either of those companies are examples that would say Berkshire’s abandoned its focus on value. I think it’s just a difference in the way that you look at growth and look at quality and look at how that emerges in prices over a long period of time,” said Rinehart.