CHAPEL HILL, N.C. (MarketWatch) — Which stocks would a young Warren Buffett buy today?

It’s an important question to emerge from last weekend’s Berkshire Hathaway BRK.B, +0.07% annual shareholders meeting in Omaha, Neb. Buffett, who is 84, acknowledged that he is interested in acquiring only very large companies, since only they will meaningfully boost profits at his giant conglomerate. The implication is that there are other companies that he would find just as compelling, if not more so, if it weren’t for their smaller size.

Unfortunately, Buffett didn’t say which companies those might be.

We nevertheless may be able to identify them, courtesy of a recent study from the National Bureau of Economic Research and AQR Capital Management. Its authors discovered a stock-picking formula that would have been able to replicate Buffett’s returns over the past 50 years.

The formula is quite complex, containing over a dozen components. Three major characteristics of stocks stand out:

Safety , as measured by low historical volatility and low beta.

, as measured by low historical volatility and low beta. Cheap , as measured by low price-to-book ratios.

, as measured by low price-to-book ratios. High quality, meaning stocks that are “profitable, stable, growing and with high [dividend] payout ratios.

Because companies that satisfy those criteria tend to be conservative, we can tolerate allocating more of our portfolios to them than we would with more speculative stocks. This increased leverage — or borrowing for investing purposes — is a crucial part of replicating Buffett’s long-term track record, the study’s authors found.

Investors often overlook the important role played by Buffett using leverage because the net effect of borrowing to buy safe, low-volatility stocks can still be a conservative portfolio. Berkshire Hathaway’s beta, for example, based on its gyrations over the past five years relative to that of the S&P 500, is only 0.53. That’s barely more than half the beta-related risk of a broad stock market index fund. (A beta of less than 1 means a stock is less volatile than the market. A beta of more than 1 indicates it’s more volatile.)

Still, according to the authors of the study, Buffett applies a leverage factor of about 1.6-to-1 to his investments. So investors wishing to replicate his performance over the long run would need to do the same.

You may object on the grounds that you don’t as much money to borrow as Buffett does (courtesy of his huge insurance operations). But that objection may not be fair, since few investors allocate 100% of their investable assets to stocks anyway.

If Warren Buffett started all over today ...

If you currently allocate some of those assets to bonds, for example, you could maintain the same overall risk profile in your portfolio by shifting some of that fixed-income allocation to the safer high-quality stocks that Buffett favors — and thereby benefit from the leverage that the NBER study’s authors identify as a crucial part of his investment strategy.

The following stocks in the S&P 1500 Index receive favorable scores from FactSet on each of the dimensions that the study’s authors use to define cheap, safe and high-quality. Their price-to-book ratios and betas are below average, while their “profitability” (total profits as a percentage of assets) is above average, as is the five-year earnings growth rate. Their dividend payout ratios also are above average.

—American Eagle Outfitters AEO, -1.67%

—American Vanguard AVD, -2.76%

—CSG Systems International CSGS, +1.23%

—Comtech Telecommunications CMTL, +0.45%

—CryoLife CRY, +3.82%

—GameStop GME, +2.93%

—Haverty Furniture HVT, -0.27%

—Kohl’s Corp. KSS, +0.60%

—Marcus Corp. MCS, +9.56%

—Owens & Minor OMI, -2.11%

—Rent-A-Center RCII, -0.87%

—Scholastic SCHL, -0.70%

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