Finding The Next Warren Buffett: Justin Uyehara

By Marketocracy

Justin Uyehara has a 10 year track record with Marketocracy, showing an annualized return of 30% a year, net of fees. By comparison, the S&P 500 returned less than 9% a year during the same period. Justin is up a cumulative 240% over the past 5 years, and up 22% so far this year, net of fees. He is profiled in the book “ The Warren Buffetts Next Door” by Forbes Investment Editor Matt Schifrin. Could Justin Uyehara be the next Warren Buffett?

Investment Style

With a portfolio turnover rate that has at times exceeded 3000%/year, Justin Uyehara’s investment style is very different than Buffett’s. Where Buffett has come to define value investing, Justin is the quintessential swing trader.

Buffett likes stocks that have solid, steady growth. Justin likes volatile markets because that’s when the swings between the highs and the lows are at their biggest. Buffett likes to find stocks that he can hold forever. It is rare for Justin to hold onto a stock for more than a few months.

However, to me, its more important that he deliver Buffett-like returns than that he make the same decisions Buffett would have.

A Great Stock Picker

Over the past 10 years, Justin has invested in a total of 1204 stocks at one time or another, and made money on 797 (66%) of those stocks. Careful stock selection is a key to Justin’s success.

A Decent Trader With An Excellent Sell Discipline

Justin’s average gain to loss ratio is 1.08. This ratio tells me that on average he makes 8% more when he is right about a stock than he loses when he is wrong. To keep this ratio above 1.0, you have to be good at cutting your losers off while the losses are small. In 2008, when the market was crashing, Justin’s discipline led him to sell relatively early while the losses were small. As a result, in 2008 when the S&P 500 fell 37%, Justin was down just 1.2%, net of fees.

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