Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
No. of Recommendations: 1
"Warren Buffett said Greg Abel should have the final decision on investments at Berkshire Hathaway, making clear that his successor will have authority over not just takeovers but the sprawling conglomerate’s mammoth stock portfolio as well.
I think the responsibility ought to be entirely with Greg,” Buffett said from the stage at the CHI Health Center in downtown Omaha. “I used to think differently about how that would be handled, but I think that the responsibility should be that of the CEO.”
...many had anticipated Berkshire’s $336bn stock portfolio would fall to Buffett’s two investment deputies, Todd Combs and Ted Weschler, and that those two men could play a large role in how the company’s $189bn cash pile is deployed."
https://www.ft.com/content/2d55b909-c543-400b-80b4...Could this change in his preference be driven by Ted and Todd's portfolio performance (which, as estimated by the FT, has lagged the S&P 500 by 4 to 5% annually in the last decade or so)?
No. of Recommendations: 0
"Could this change in his preference be driven by Ted and Todd's portfolio performance (which, as estimated by the FT, has lagged the S&P 500 by 4 to 5% annually in the last decade or so)?"
Why has he given both of them more money to manage? Warren employing the martingale strategy? LOL
jk
No. of Recommendations: 7
FWIW here's a response I sent to a friend today on a somewhat similar question:
I'm not concerned about the equity portfolios of WEB, Todd, and Ted compared with the S&P 500. Berkshire is following WEB's game plan.
There is a study that I read long ago that appears to have reappeared and to have been updated. Professors loudly announced that Buffett was no genius stock picker. Analysis of his past results showed that a combination of leverage from float and primarily investing in cheap, safe stocks were the reasons for his success. He never lost significant money. My emphesis.
What they didn't say is that he figured this out over a half century ago. And that the combination of retaining all earnings, and growing them through acquisitions, permitted the magic of compounding to produce Berkshire today.
If you back out the impact of the Apple purchases I think T&T and WEB's performances would be very similar. And T&T led WEB to open his eyes that Apple was not a technology stock subject to sudden collapse due to other technology breakthroughs. That's the event that even permits BRK to stay close to the SPY. That's what separates T&T and WEB.
In my view, WEB, Ted, and Todd are all still following Rule 1 - Don't Lose Permanent Capital - and Rule 2, reread Rule 1. As such they've viewed the high flying stocks that dominate SPY returns as being more risky than they wish to accept. So they remain on the sidelines. As a percent of BRK assets, cash and fixed income are still at about the same percent of assets as they've been in history. The absolute amount is larger but the share hasn't changed much. Warren believes another financial crisis will permit him to deploy this - hopefully in his lifetime. And he promised in the current meeting to do a better job of deploying it than he did in 2008-09. Back then he largely made temporary investment rather than long term one. BAC is the major exception. This time he'll focus more on lasting investments.
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No. of Recommendations: 2
https://youtu.be/BBXh2IveLm8?si=mcEADk6nkNnpCLmkLink to the discussion.
I take the same from this that Greg will have final say over the big decisions and T&T will be reporting directly to him
a) on both their ongoing performance in future and;
b)both will be assisting Greg in the evaluation of possible acquisitions and suggesting publicly listed companies to buy large positions of.
Interesting insights into the future management of BRK.
No. of Recommendations: 0
“ I take the same from this that Greg will have final say over the big decisions and T&T will be reporting directly to him.” Obviously this is very significant news. We have been told by Buffett that he doesn’t even know what T and T are doing until he sees the confirms or the reports. This is a material downgrade in Buffett’s confidence in T and T. T and T may both be gone within two years,imo.
No. of Recommendations: 0
All the gurus (hangers on) will be having selfies / and lunches with Greg now, Waiting for T&T to fall on their swords 😂
No. of Recommendations: 2
Analysis of his past results showed that a combination of leverage from float and primarily investing in cheap, safe stocks were the reasons for his success.
Texirish, I was aware of the analysis you're writing about, but I hadn't put these thoughts together with Ted & Todd's performance until your post. Essentially, the float leverage belongs to Berkshire. And since T&T are provided cash to invest, they don't have the luxury of including the float leverage into their own comparisons to the S&P.
a) on both their ongoing performance in future and;
As an American, I used to think the phrase "in future" was just a wrong way to say "in the future" so I looked it up, and it means "from now on" in British English. I can get behind that meaning, it's useful. But in this scenario, it suggests Greg is to comment on T&T's performance starting now, rather than at a future date. My preference would be to say "in the future" as I believe that the two roles you included for Greg will both start at a future point in time when Buffett is no longer heading Berkshire Hathaway.
