3 Things Most Investors Don't Know About Warren Buffett's Investing Style
As frequently as investors might hear about Warren Buffett's time-tested value-investing philosophy, there's a lot that people still don't know about how the Oracle of Omaha evaluates stocks.
In particular, there are three things about his investing style that are especially under the radar. Let's learn about them and look at a couple of examples that demonstrate his thinking.
Most investors don't know that Buffett dislikes companies that need to consistently spend a lot of their revenue on research and development (R&D). Let's take a major pharmaceutical company like Eli Lilly (NYSE: LLY) as an example to explain his thinking. In 2021, it spent more than $7 billion on developing new medicines against its total revenue of $28.3 billion. For the money, it advanced a handful of its myriad clinical trials and preclinical projects. And that'll allow it to eventually commercialize at least a few of its programs to generate more revenue than it does today. But if Eli Lilly one day decided to stop its R&D investments, its competitors would eat its lunch in a matter of years because they would develop and commercialize better therapies.
Source Fool.com