Opinions
Norman Levine
Berkshire Hathaway Inc. (B)
BRK.B-N
PAST TOP PICK
Aug 31, 2021
Stock price when the opinion was issued
You might be interested:
More or less fair value on valuation. Ran up with market volatility, as it's always a safe haven. Buffett's retiring, end of an era. Greg Abel has the chops, an excellent operator. Excited to see how he'll use the cash balance and improve operations. Insurance stocks have pulled back, making this an attractive entry.
Great proxy for growth of the US economy. Will really benefit from trends of AI and electricity demand. No dividend.
Considered a growth company. Great job growing FCF per share over the last 50 years. Exceptionally well run. Buffett may be stepping back, but culture he's instilled for capital allocation and ethics will transfer to the next generation of leadership with Greg Abel.
Only concern is valuation, bit rich. Becomes increasingly difficult for large companies to allocate capital at high rates of return. Forward rate of return is probably high single-digit or low double. An 8-10% rate of return is strong in his view. High-quality and predictable business. Many have done poorly betting against it.
Extremely well run. Shares pulling back from highs once Buffett announced retirement. Share price at 200-day MA, an inflection point. You have to understand that it's a fairly concentrated conglomerate of companies, including AAPL (though position was trimmed). Value strategy, which does well in time of uncertainty and higher interest rates; not so much when growth is on the boil with S&P being driven by tech.
Likes it long term, but big overhang on new management right now. If drops below 200-day MA, investors need to pay attention. Also tied to your outlook on AAPL.
P&C insurance is very defensive, so it draws crowds when people get panicky in the market and the price gets bid up. Has become too inefficient as it's gotten bigger. Instead, he'd prefer some of the US private equity names for the capital levers they can pull, which have similar business models.
Warren Buffet, in his annual letter, said that when he retires, he will just buy the S&P 500. This is not bad to hold in a taxable account, because this will compound and does not pay a dividend (so no taxes on that). He likes Berkshire, but won't be that different from owning the broad U.S. market.
We all knew Buffett would retire, but the announcement itself was unexpected. His successor is very well known. AAPL is a very big position, so potential headwinds with tariffs. Well run, defensive. Market rally since April has been more on the super-growth areas. Still a solid, long-term hold.
(A Top Pick Mar 12/20, Up 62%) It's the ultimate value stock. They're big in financials, rails and cyclicals, but their biggest holding is Apple. An interesting mix of holdings here. This is a no-brainer. True, Buffet and Munger won't be there one day, but how much input do they have day-to-day? He's confident that BRK will carry on.