A pattern in Buffett's biggest buys and the Columbia professor's model that explains it

2 years ago at the Berkshire's Hathaway ValueX event, I got to meet **Paul Johnson** who is the adjunct professor at Columbia Business School. He has been teaching there for over 30 years through the Heilbrunn Center for Graham & Dodd Investing. He is also the co-author of Pitch Perfect Investment and Gorilla Game. He gave a presentation on a framework he calls the "Value of Growth" (VoG), and it clicked with something I've been thinking about for a while, so we connected afterward and ended up collaborating on a spreadsheet model. **The core idea is simple but powerful:** Most DCFs encourage you to project growth rates and debate assumptions. The VoG framework flips the question. Instead of asking "what will growth be?", you ask: **"how much growth is the market already paying for?"** It works like this: 1. You start by calculating an **Earnings Power Value (EPV)**. This tells you what the business is worth if it just sustains its current normalized earnings with zero growth. 2. Then you compare that to the current stock price. The gap between EPV and the market price is what Paul calls the **Market-Implied Value of Growth (MIVoG)** which is basically, the amount of future growth investors are collectively betting on. After this calculation, your edge as an investor comes from having a different view on whether that implied growth is too optimistic, too pessimistic, or about right. This all sounds great in theory but what made it click for me is looking at Buffett's major purchases through this lens. When you run Chevron, Apple, and OXY through the model, a pattern shows up. Warren Buffets tends to buy when EPV accounts for most of the stock price. In other words, he's buying when the market isn't demanding much growth to justify the valuation. The growth is essentially free optionality. For example in 2016 for Apple, he bought when the EPV value to the MIVoG was only \~65%. In recent times he he has sold when the ratio has been much lower at around 26%. Paul believes this is not a coincidence but rather a classic margin of safety applied to growth expectations. **The model:** After the event, Professor Johnson and I worked on making his spreadsheet dynamic so that you can change the company ticker and get all the calculations done automatically. Using NOPAT as a building block, layering in the EPV calculation, and then showing you exactly what growth assumptions are baked into the current price with the numbers and graphs. You can grab the model here for free: [https://www.transfernow.net/dl/202602232Sw3irHO](https://www.transfernow.net/dl/202602232Sw3irHO) If you use Wisesheets the formulas baked in allow you to keep the data live and update it when you want to. If you don't, you can still copy/paste the data from any financial site and see the calculation results. I'd love to hear how the numbers look when you run your own holdings through it. I recently added Microsoft to my holdings and it shows a ratio of 40% which has historically yielded great returns.