Buffett’s Alpha

29 August 2012
Source: Yale Department of Economics
Andrea Frazzini David Kabiller Lasse H. Pedersen

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Summary

The authors find that Berkshire Hathaway has a higher Sharpe ratio than any stock or mutual fund with a history of more than 30 years. Berkshire relies on unusually low-cost and stable sources of financing, and its returns can largely be explained by the use of leverage combined with a focus on cheap, safe, quality stocks.
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