- Barbara Ann Bernard explained Warren Buffett’s passionate fanbase, detailed why tech stocks have surged this year, and shared how stock-pickers can still find bargains in a recent interview with Business Insider.
- “Warren’s integrity, humility, frugality, charitable nature, and contagious zest make people admire and trust him,” said the Wincrest Capital boss and cofounder of the Variant Perspectives: Women in Value Investing conference.
- Bernard highlighted Zur Rose, a Swiss online pharmacy, as an example of a quality investment at a compelling price.
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“What excites me is that I can still find wonderful businesses that will benefit from this once-in-a-lifetime digitization tailwind, which I do not have to pay 20 times sales for, like I would for Airbnb,” Bernard said.
- Visit Business Insider’s homepage for more stories.
Value investor Barbara Ann Bernard explained Warren Buffett’s unique appeal, outlined why the spike in tech stocks this year is partly justified, and highlighted opportunities for bargain hunters in a recent interview with Business Insider.
The founder and investment chief of Wincrest Capital said Buffett’s “common-sense” approach to investing has guided her throughout her career. However, she argued that 40,000 people descend on Berkshire Hathaway’s shareholder meeting each year for more than stock-picking tips. They make the pilgrimage because they share Buffett’s values, beliefs, and life philosophy.
“Fans trust Warren’s investment advice because they trust him as a person,” Bernard said. “Warren’s integrity, humility, frugality, charitable nature, and contagious zest make people admire and trust him.”
“That makes him a phenomenal leader, because it is that shared connection that empowers strangers who meet at his annual meeting to do extraordinary things together,” she added.
Bernard is a case in point. She met Kim Shannon and Laura Rittenhouse at Berkshire’s yearly gathering in 2018, and the trio of financial experts joined forces to launch Variant Perspectives: Women in Value Investing, a conference that aims to connect female fund managers with leading investors, in 2019.
They held the event on the same weekend as Berkshire’s annual meeting, and Buffett dropped by to kick things off.
Learning from the masters
Bernard’s investing journey began at age 16, when she worked as Sir John Templeton’s intern at the legendary stock-picker’s Templeton Global Advisors. While her Wincrest fund doesn’t currently hold Berkshire shares, she has spoken at the company’s annual meeting a couple of times and continues to draw lessons from Buffett.
“Something I am trying to learn from Warren, and Sir John Templeton did this well too, is the ability to talk about complex issues in a manner that is easy to understand,” Bernard told Business Insider.
“When ideas are said in a memorable (and in the case of Buffett, often humorous way), they get repeated,” she continued. “Ideas that get repeated ripple all the way around the world in terms of their impact.”
Growth vs value
Stock-pickers are often split into two camps: value investors hunting for businesses that are underpriced by the market, and growth investors who will pay a premium for companies that are expanding quickly and have the potential to become world-beaters.
Bernard dismissed that divide, quoting what Buffett said at the Variant Perspectives conference last year:
“We don’t consider ourselves value investors, we consider ourselves investors — and there’s only one thing to do in investing and that goes back to Aesop in 600 BC. He said a bird in the hand is better than two in the bush, and he was laying out the theory of investing. The question is how far away is the bush, and how sure are you the bird is in the bush, but all investing is to lay out something now to get more later.”
“There is no such thing in our mind as value or growth investing,” Buffett added.
Bernard argued the tremendous surge in technology companies’ stock prices this year reflects the expansion of their total addressable markets.
After all, sweeping lockdowns have closed physical stores and suspended many out-of-home activities, forcing more people than ever to rely on apps and websites to shop, exercise, work, communicate, and entertain themselves.
Tech companies may boast unprecedented growth opportunities, but their stock prices can still exaggerate their prospects. Bernard pointed to Airbnb, which went public last week and immediately doubled in value, snagging a market capitalization of about $100 billion at its peak.
She lauded the home-rental company’s global network of hosts and guests and expects it to benefit from both a rebound in vacationing and the remote-working trend, but she questioned its heady valuation.
“Airbnb is a good business, but for it to be a good investment, it would have to be bought at the right price,” Bernard said. “Price is what you pay, value is what you get,” she added, quoting Buffett’s famous maxim.
Deals are still available
US stocks may be flirting with record highs, but there are still enticing opportunities for investors in Europe and emerging markets, Bernard said.
She highlighted Zur Rose, a Swiss online pharmacy, as one example. The business grew its net revenues by 12% to $1.6 billion last year, yet its market cap was roughly equal to its yearly sales in the first quarter of this year, when Wincrest invested. Its stock price has skyrocketed 155% since January.
Bernard expects Zur Rose to benefit if COVID-19 cases spike and people order more medications from their homes. Even if the pandemic threat recedes, she anticipates the company will continue to cash in on the relentless shift to e-commerce.
It also stands to gain from Germany making electronic prescriptions mandatory from 2022 onward, she continued, and could be a takeover target for a bigger company such as Amazon, which launched its own online pharmacy last month.
“What excites me is that I can still find wonderful businesses that will benefit from this once-in-a-lifetime digitization tailwind, which I do not have to pay 20 times sales for, like I would for Airbnb,” Bernard said.
Buffett famously seeks to buy “wonderful businesses at a fair price.” Bernard’s devotion to finding those types of investments in an extremely toppy market shows she’s following in his footsteps.
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