Warren Buffett, the billionaire investor and founder and CEO of Berkshire Hathaway, does not hold any positions in penny stocks, as of 2015. The Berkshire Hathaway fund invests in long-term value companies with an emphasis on the stocks of well-known insurance companies, explains Investopedia.Continue Reading
Buffett did invest in penny stocks early in his career as a stock trader. Buffett would buy stocks of undervalued companies that were trading at pennies on the dollar in relationship to fair value. According to the book ���The Snowball,��� Buffett made his initial fortune by investing in companies with discounted stock prices, reports the New York Times.
Today, Warren Buffett���s investment approach consists of insurance companies and blue-chip value companies that are trading lower than fair value. His Berkshire Hathaway fund holds positions in mega companies such as American Express, Coca-Cola, Wells Fargo and International Business Machines, known as IBM. However, Buffett does invest in lesser-known companies with discounted stock prices. Buffett uses a ���circle of competence��� approach to investing, which consists of businesses he can easily analyze and interpret, explains Investopedia. Using the ���circle of competence,��� Buffett decides if a company���s future earning power is greater than the company���s current fair value, also known as the market value.Learn more about Investing