CHAPEL HILL, N.C. (MarketWatch) — Berkshire Hathaway’s annual meeting last weekend highlighted Warren Buffett’s special touch as an investor.
But with each passing year, some investors wonder what will happen to Berkshire Hathaway’s BRK.B, -0.42% stock performance once the legendary investor, now 87 years old, is no longer at the helm of the company.
Fret not. And if the stock falls, you should buy.
I say this because of an academic study several years ago that, in effect, “broke” Buffett’s secret code. The study, titled “Buffett’s Alpha,” was written by three principals at AQR Capital Management, each of whom has strong academic credentials: Andrea Frazzini, David Kabiller and Lasse Pedersen. The study derived an investment formula that, if mechanically followed over Buffett’s five-decade career, would have replicated his fantastic returns.
The implication of this research is that continuing to perform well in a post-Buffett world is not as dependent on his undeniable, but inscrutable, wisdom and shrewd insight as some people think.
I hasten to say that this is not a criticism of Buffett. It’s quite a feat that it took researchers five decades to unlock his code, after all.