No. of Recommendations: 21
You all may disagree but today, in part, underscores a bigger picture: Berkshire Hathaway continues its multi decade transition into a collection of operating companies, consistently reducing stock holdings relative to the overall enterprise size. Warren is teeing up OpCo Berkshire for his operating guy, Greg Abel, who will take FULL control.
Just as Charlie Munger was the architect of Berkshire Hathaway for Warren Buffett …Warren Buffett is the architect of the rapidly evolving newer Berkshire Hathaway for Greg Abel. Who, not at all coincidentally is his chief operating guy today..
Right-sizing a bloated Apple position just makes sense (though the quickness & size surprised) but Buffett’s priority this millenium is heavily tilted away from public stocks and towards the acquisition of entire businesses. This is a longer term trend. Sure if public equities crash and he can grab a fire sale he’ll always buy a buck for 50 cents.
But I look for Berkshire to continue its tilt, perhaps even more aggressively, toward acquisitions. Away from public stocks. I also think he might like to do a complete public stock buyout ala Burlington Northern and GEICO. Sure looks like Occidental may be a possibility. I think a large Insurance Company deal is also very possible. Because at its heart—this IS an Insurance business first and foremost. That’s our main engine and always has been.
The book value multiple comparisons over time have become,to me, almost irrelevant. I mean 1.4 times Coke ON TOP of several times KO book is insane valuation. That’s kinda the 1990 book. 1.4 times Burlington Northern? Conservatively rational. More 2024 type book. As we become a collection of OpCos…book multiples HAVE and should RISE over time…. Then there’s the crazy newer GAAP rules valuing stock movements each quarter. That moves Book Value multiples COMPARATIVELY from almost meaningless —to outright deceptive.
OTOH Operating Earning are now and will continue to be INCREASINGLY indicative of Berkshire’s progress and economic health. And selfishly I like that lol: they’re an easy read. Berkshire will become increasingly EASIER to value. Berkshire is doing well. Greg Abel will inherit a gem of a company.
