Warren Buffett Steps Down – and Turns His Back on German Stocks
Why the value-investing legend sees too little value in the DAX and which companies would still fit his philosophy
On December 31, it’s over: investment legend Warren Buffett will step down as chairman of Berkshire Hathaway. Greg Abel will take over as the new CEO. Recently, Buffett has invested very little. In Germany, he didn’t hold any stocks at all.
“The DAX offers too little value at too high a price. For Buffett, that makes German companies essentially worthless,” says David Bader-Egger from the analysis platform Stockanalyzer.eu. Although there are plenty of quality companies in Germany, Buffett requires four additional criteria to be met before he buys:
Intrinsic value – How much is the company really worth, in contrast to the share price, which can be over- or undervalued.
Margin of safety – The share price must be below its true value so that the stock can be bought “cheaply.”
The $1 test – How much value does the company create for every dollar of earnings that is retained and reinvested?
Moat – What sustainable competitive advantage protects the company from its rivals (e.g., patents)?
According to Bader-Egger, none of the German stocks currently fulfill all of these criteria. The only DAX stock that comes close is Munich Re. Buffett actually held Munich Re between 2010 and 2015 – the only German share ever in his portfolio. But at present, the stock is about 20 percent too expensive to qualify under Buffett’s standards.
Another stock that would be very much “Buffett-style” can be found in the MDAX: CTS Eventim. Its business model resembles a gatekeeper that no concertgoer can bypass – a strong moat. Even Jan Böhmermann’s sharp criticism on German television in 2023 only caused a brief dip in the share price before it surged massively. But according to Bader-Egger, it is currently overpriced by up to 30 percent for a Buffett-type purchase. Two companies that would fit Buffett’s investment philosophy perfectly aren’t even listed on the stock exchange: Bosch and Lidl. “Bosch’s engineering excellence represents a deep moat, and Lidl’s purchasing power and operational excellence are extraordinary,” says Bader-Egger.
As for what generally characterizes German companies, the expert sums it up clearly: “They offer real quality and deep moats, whereas many international competitors have mainly strong marketing. But investors like Buffett only buy quality when it’s cheap – at least ten percent below intrinsic value.” A small consolation: “Right now, Buffett wouldn’t even buy his own stock. The hype surrounding him has made Berkshire Hathaway overvalued as well.”
About David Bader-Egger
David Bader-Egger is the founder of Stockanalyzer and developed the idea of teaching software to think like Warren Buffett. He has been analyzing Buffett’s investment decisions for more than a decade, is a multiple book author, and is known from the TV show 2 Minutes 2 Million, the Austrian equivalent of Dragons’ Den / Shark Tank.
About Stockanalyzer GmbH
Stockanalyzer is an analysis platform for private investors that evaluates stocks according to value-investing principles. These include intrinsic value, margin of safety, quality, stability and economic moat. The software has “learned” to think like Warren Buffett. Stockanalyzer is a pure analysis tool, not a trading platform.
