Warren Buffett made news this morning, not just for making the largest acquisition of his career, but for making it at a relatively lofty 22x earnings multiple.
Warren Buffett is paying a hefty price for the biggest acquisition of his career, now that his Berkshire Hathaway Inc has agreed to buy Precision Castparts Corp in a merger valuing the maker of aerospace and other parts at $32.3 billion.As for that valuation...
Buffett, known for buying undervalued and often unloved companies, acknowledged the high price. "In terms of price-earnings multiple going in, this is right there at the top," he told CNBC television.
The Death of the (Plain Vanilla) Value Premium
Which brings me back to a chart from my March post outlining The Disappearing Value Premium since the seminal Fama French white paper.
An equity investment strategy that seeks to combine tenets of both growth investing and value investing to find individual stocks. GARP investors look for companies that are showing consistent earnings growth above broad market levels (a tenet of growth investing) while excluding companies that have very high valuations (value investing).