How does he do it? Author Robert Hagstrom tried to compile Buffett's key investing strategies in his 1994 best-seller, The Warren Buffett Way: Investment Strategies of the World's Greatest Investor. With Hagstrom's book as a source, we at S&P Quantitative Services have put together a stock screen that picks companies using criteria similar to the legendary investor's growth-oriented style. S&P updates this screen on a semiannual basis, during February and again in August.
We have been running this screen for more than 12 years. Since its inception on Feb. 13, 1995, through July 31, 2007, the screen has had an annualized return of 15.69% vs. 9.28% for the Standard & Poor's 500-stock index. Year-to-date through July 31, 2007, the Buffett screen stocks outperformed the market, returning 7.69% vs. the 2.61% gain for the S&P 500 (all results are price appreciation only).