Though Buffett is commonly considered to be a value investor, he seems just as focused on growth. Either way, he’s proven that he’s an intelligent investor. As Buffett’s sidekick Charlie Munger once said, “All intelligent investing is value investing.”
Google as a value stock Buffett focuses on companies with favorable long-term economics that have strong competitive advantages, companies such as Burlington Northern Santa Fe (NYSE: BNI), Coca-Cola, Kraft Foods (NYSE: KFT), and Johnson & Johnson (NYSE: JNJ) — all current Berkshire holdings.

Coca-Cola, for instance, was called by one Wall Street analyst “very expensive” around the time Buffett started buying it. It wasn’t a typical value stock. But Buffett once said about Coca-Cola: “If you gave me $100 billion and said take away the soft drink leadership of Coca-Cola in the world, I’d give it back to you and say it can’t be done.”
Now that’s a competitive advantage.

See, value investing is not all about buying stocks with low price-to-earnings, price-to-book, or price-to-sales ratios. Far from it.

For example, Google would have been a great value stock at its August 2004 IPO, despite selling at the time for more than 100 times earnings.
A value stock trading for more than 100 times earnings? Yep. Google was growing fast, was continuing to take market share, and had a sustainable competitive advantage. Given its growth rate since and its powerful model, it was underpriced back then.

So I’d suggest that Microsoft CEO Steve Ballmer should take a page out of Buffett’s investing book, keep the $45 billion he wants to spend on buying Yahoo!, and forget trying to take search engine leadership away from Google.
Investing shock: Buffett was wrong?! Buffett didn’t buy Google, but legendary value investor Bill Miller saw the value and scooped up shares…

OK, that’s one point of view: let’s balance it with this famous word of Lord Keynes: “A speculator is one who runs risk of which he is aware & an investor is one who runs risks which he is unaware…” It seems to me that today, there might be too many investors in the markets!

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