Warren Buffett’s investment approach wasn’t always the same throughout his career. His current style of buying big companies with competitive advantage was different from the investment style he started with. Likewise, the Berkshire Hathaway that we know today is a conglomerate. When Warren Buffett bought Berkshire it was an unsexy textile business with profitability issue. But the share price was way below the book value of the company and offers a lot of margin of safety so Warren invested. This is the classic Benjamin Graham’s teaching with regards to investing. Buffett has been implementing Graham’s strategy when he began his career and the former coined such stocks as cigar butt stocks.

“A cigar butt found on the street that has only one puff left in it may not offer much of a smoke, but the “bargain purchase” will make that puff all profit.” ~ Warren Buffett.

Very often, these cigar butt ......