Invest your own money, let compound effect be your leverage, and avoid debt like the plague.
- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 5
As I've stated before, I think that Berkshire Hathaway is the best company in the world, but I, like all of us, think that some parts are less than stellar. I'll mention a few parts that I'm critical of, and maybe you will chime in with parts that you think are particularly good or not so good.
1. I'm an outspoken critic of owning PacifiCorp. The fire risk in California and Oregon is just too high. Just ask PG&E.
2. I'm not a huge fan of buying OxyChem. Berkshire probably got a good price ($9.7B), but the chlor-alkali business is at best a so-so business.
3. Kraft-Heinz stock is down from $90 to $24, and Buffett has stated publicly that he doesn't think that splitting the company will help. Buffett has also stated that he paid too much for Kraft. Personally, I think that 3G was not a great partner in the original Heinz deal. 3G's business strategy was basically just to cut staff.
Some people on this board have also been critical of Precision Cast Parts and Lubrizol.
What's your take?
No. of Recommendations: 18
1. I'm an outspoken critic of owning PacifiCorp. The fire risk in California and Oregon is just too high. Just ask PG&E.
2. I'm not a huge fan of buying OxyChem. Berkshire probably got a good price ($9.7B), but the chlor-alkali business is at best a so-so business.
3. Kraft-Heinz stock is down from $90 to $24, and Buffett has stated publicly that he doesn't think that splitting the company will help. Buffett has also stated that he paid too much for Kraft. Personally, I think that 3G was not a great partner in the original Heinz deal. 3G's business strategy was basically just to cut staff.
Some people on this board have also been critical of Precision Cast Parts and Lubrizol.
The list for both the Good and Not So Great columns is long.
It's hard to argue with the insurance business. Insurance float plus disciplined, long-term value investing is at the top of the Good list.
The railroad is low growth but low risk.
Some of the stock holdings (Amex, Coke, Moody's) are unspectacular but probably safe. Apple is a great business, and while it seems overpriced, it's probably a good long-term hold.
In the less stellar column, of course there's Pacificorp and KraftHeinz, but I think Chevron and Oxy and Oxychem and Lubrizol will end up working ok, like Coke.
In the wholly owned business, I hate Pilot's outgoing management, and he overpaid (partly through outgoing management's fraud), but it will be ok eventually. Precision Cast Parts, I don't know enough about to comment.
Ultimately, the good outweighs the bad, because the basic structure is good and the people are honest and hardworking and smart. The bad bets like Pilot and Kraft and Heinz will end up being small, and the good bets like Apple will end up being huge, and it will all work out in the end. I think.
dtb
No. of Recommendations: 4
The company was itself founded and named after a failing textile mill. It hasn’t done too badly, even with the misses. The hits compounded over 6 decades, turns the losers into rounding errors.
I have noticed this with my own portfolio. The top 7 stocks in my portfolio are over 75% in current market value. While their cost bases is less than 50%. The winners like BRK, AAPL, COST made up for losers and laggards like PFE and INTC.
No. of Recommendations: 20
Some parts HAVE ALWAYS BEEN and will ALWAYS be..less than stellar, yes.
In fact, I would argue there are far fewer less than stellar investments today than in Warrens heyday. Warren admits he owned all sorts of really bad investments in his younger days—that only worked out because he bought them Ben Graham cheap and got out before they went sour or out of business.
My take is Berkshire has now and has always made lots of mistakes. Nothing new here… it’s part of the deal…it’s reality. Buffett’s most egregious mistakes this century have not been wipeouts (that’s KEY) and they generally pay cash to headquarters regularly along the way. Some of his worst large mistakes were essentially sideways investments when you look at purchase/sale and cash returned.
Obviously, as an example, Kraft yes was a real mistake. But what do our “losers” look like? This is typical: Kraft safely pays out a fat quarterly dividend, has returned a boat load of cash to hdqtrs. It’s a loser but ultimately I don’t think will be an unmitigated disaster. The goal is ZERO disasters.
Truth is..
One Apple a day keeps the doctor away.
One Apple a decade generally takes care of performance worries.
One Apple a decade takes care of a dozen processed foods mediocrities lol.
Berkshire’s record on its rare “all-in” has always powered its overall performance. Obviously there will be issues, sometimes major ones, with subsidiaries. But look at the purchase price—and gain of Burlington Northern bought on the cheap, of GEICO since the 49% share became full ownership, of the furniture group, of the utilities/energy segment…we could go on. The losers, meanwhile at least keep churning out cash… $1 Billion+ a week compounds nicely …with a risk/reward capital profile that’s the envy of the world.
And don’t forget—Berkshire owns the safest mega cap in world history, safer than Berkshire itself: the 26th largest “company” in the US: it’s cash and cash equivalents.
But sure…it’s not perfect.
Something to ponder as investors ask —where the heck are the $Trillions in AI spending taking those companies? Anyone have any idea?
CEOs “no, not really ..but this is a race we can’t afford to lose”.
And you’re worried about OUR capital spends? :)
