No. of Recommendations: 30
Trimmed a little...
I trimmed a lot - well, in fact, I sold all my shares. $37b in operating earnings is fantastic, but that's almost the end of the good news. I don't know if Buffett was trying to moderate people's expectations, with such stellar operating results and the recent high prices, but it sure worked for me.
Here's what retained my attention.
On the positive side:
(i) as expected, interest income is much improved, with higher interest rates;
(ii) underwriting was stellar as well, with no big catastrophes last year;
(iii) the stock portfolio is doing well, as you would expect, with stock markets reaching new highs.
On the negative side:
(i) underwriting is the most volatile part of operating earnings;
(ii) stocks are overvalued, and in particular, I have a lot of concerns with the 50% concentration in Apple;
(iii) the railroad is not doing very well;
(iv) the energy utility was awful, and its prospects are awful. I don't think I've ever heard Buffett express so much regret about a huge part of the businesses run by Berkshire. In particular, the utility and railroads which we thought might be able to be absorb tremendous amounts of capital with low, but guaranteed, returns, making the float valuable, turn out to be much more vulnerable than most of us thought. No wonder the subject of a dividend came up.
(v) the subject of a dividend came up.
(vi) there are really no prospects for big private acquisitions, and Buffett's not interested in venturing outside the USA (despite the USA turning out to be not so reliable after all).
(vii) I can't name a recent fully acquired business that has really worked out well: Energy utilities, BNSF, Precision, BAC, and now Pilot (ok, there was Apple; but see point ii). And with Pilot, I have to even question Buffett's good judgment which I have put so much faith in. The Haslams seemed pretty crooked to me when the deal was announced, and recent events have completely borne out that initial impression.
(viii) It sounded like Buffett might be ready to pass the baton. Maybe it's not as much fun without Charlie.
So I'm not happy any more having a big part of my investments with Berkshire. I'm not happy coming to this conclusion, after over 20 years with a big Berkshire position, and I admit to feeling some regret, and maybe I am acting too quickly. But this is my time out at $425, and I think the price would have to be a lot lower to get me back in. Berkshire is probably still a reliable way to stay rich, if you're already very rich, but I'm not rich enough not to want to get richer.
DTB
