To The Moon

🌟🌟🌟What is a Cigar Butt Strategy?  In his early years, Warren Buffett embraced a gritty form of value investing known as the  "Cigar Butt Strategy ".  Inspired by Benjamin Graham, it involved buying companies so cheap that they were practically discarded, yet still had "one last puff" of value left.

"A cigar butt found on the street that has only one puff left in it, may not offer much of a smoke but the bargain purchase will make that puff all profit" said Warren Buffett in his 1989 Shareholder Letter.

Warren Buffett would buy distressed companies trading below their liquidation value, extract a small gain, maybe a dividend or perhaps a turnaround and move on.  It was rational, disciplined and profitable but it lacked soul. 

Why The Cigar Butt Strategy Worked and Why Warren Buffett Moved On

Warren Buffett made money this way.  But he also learned that cheap does not mean good and value without durability is fleeting.  These businesses did not compound.  They did not inspire.  They were transactional, not transformational.

Eventually, Warren Buffett pivoted toward quality businesses - those with strong brands, wide moats and the ability to grow earnings over time.  Good examples are $Coca-Cola(KO)$  $Apple(AAPL)$  and $American Express(AXP)$ .  These companies were not cigar butts.  They were quiet giants, built to last.

UnitedHealth : A Bet on Resilience, Not Perfection

Warren Buffett's recent USD 1.6 billion stake in $UnitedHealth(UNH)$  is a masterclass in his evolved conviction.  UnitedHealth has faced a storm of headlines in 2025 - CEO turnover, US Department of Justice investigations, surging medical costs.  But Buffett saw through the noise.

Valuation: UnitedHealth trades at just 12x earnings, near decades low.

Scale: 53 million Americans served, USD 400 billion in revenue.

Moat: Vertically integrated model - Insurance and Optum services.

Dividend : A steady 2.9%, yield backed by robust cash flows.

This is not a cigar butt.  UnitedHealth is a temporarily bruised titan, with enduring relevance and the capacity to recover. 

Warren Buffett's move signals his belief on mean reversion, operational excellence and demographic tailwinds of aging population. 

The Emotional Undercurrent and the Lesson Learnt

Warren Buffett's evolution wasn't just financial.  It was philosophical.  He moved from extracting value to nurturing it.  From profiting off decay to growing with vitality.

That shift mirrors the journey of my investing journey :

Starting with bargains and quick wins. 

Learning the power of compounding and quality 

Seeking businesses that offer joy, resilience and legacy. 

As Warren Buffett likes to say "Price is what you pay.  Value is what you get."

The Cigar Butt Strategy taught him discipline.  But it was the pursuit of durable value that gave his investing life meaning.

Concluding Thoughts 

My investing philosophy mirrors Warren Buffett's evolved approach.  I do not chase fleeting bargains.  I seek enduring value, choosing stocks not for a quick puff of profit, but for their ability to compound quietly, meaningfully and over time. 

Like Warren Buffett, I have moved beyond the Cigar Butt mindset.  I invest in companies with :

Strong fundamentals 

Cultural and emotional resonance 

Resilience through cycles

Capacity to grow and give back - through dividends, innovation and legacy.  My investment in $ocbc bank(O39.SI)$  is a perfect example.  It is not just a financial asset.  OCBC is a symbol of disciplined belief, nurtured over years, aligning with my values and Singapore's story.

Warren Buffett said "I look for businesses I can understand, with durable competitive advantages, run by able and honest people, and available at a fair price."

I invest in the same way - with empathy, insight and a long term lens.  My portfolio isn't just a collection of tickers.  It is a reflection of my philosophy, purpose and pride.

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