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Kraft/Unilever deal is no more, but Buffett's "anomalies" live on - WSJ

  • Much of the fortune earned by The Oracle (BRK.A, BRK.B) is thanks to his exploiting two market mistakes, writes James Mackintosh - the tendency for quality companies and low-risk stocks to outperform.
  • There are many ways to measures these anomalies, and Kraft Heinz (NASDAQ:KHC) and Unilever (UN, UL) fit all of them - whether predictable earnings, strong cash flow, lower-than-normal share price volatility, or low beta.
  • One can argue about why the anomalies exist, but the real question is whether they can continue after a strong period of outperformance, and now with massive amounts of cash (outside of Buffett) chasing the same strategy.
  • “It’s something to worry about,” says one professor who has studied the issue. “I think as awareness of these effects increases that could certainly diminish the returns.”
  • Low-vol ETFs: SPLV, USMV, HDLV, XMLV, XSLV, SMLV, LGLV, CFA, CDC, CFO, XRLV, LVHD, CSF, FDLO, ONEV, OVLC, SMMV

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