No. of Recommendations: 8
One of the largest if not the largest volume day in 5 years for the B shares. Almost hilarious how folks headed for the exit. Sure, earnings were not stellar, to me the volume was due largely to ‘Warren is out, Sell!!’
I’m not saying it was a buy based on price this past Monday, but the trading activity wreaks of a capitulation.
Likely a floor for the stock.
No. of Recommendations: 3
‘Warren is out, Sell!!’
How shocking is the announcement that things will be the same for the next eight months, after which a 95 year old will scale back from CEO to Chairman of the Board? These people handle long term investments???
No. of Recommendations: 16
Interesting volume numbers but not much change in the share price I thought. 6.5% fall is nothing really. I would not have been surprised by a 3% fall given the non Geico underwriting result and the current full valuation. Buffett retiring causing a further 3.5% fall is maybe, a token mark of respect for Buffett’s magic ending soon. Overall a perfectly moderate reaction I thought on Monday.
In terms of a floor in the stock price…I don’t see that at all.
I do have a bias here, as Berkshire is only a 31% allocation for me. Down from 90% a year or so ago. I could see the market turning quite negative on Berkshire over the next two years.
Glass half empty narrative could include:
. Energy business is more dependent on politicians than in the past. I imagine society will eventually see sense but it’s not hard to get negative on the value of BHE.
. Rail is not terribly exciting as a business. Low return, high capex. Tariff headwinds. Coal headwinds.
. Insurance can and will swing to a bad year, or at least a less good year than 2024 at some point.
. After Buffett goes, the probability of all these great managers wanting to make us distant strangers even richer, softens.
. Capital allocation is a major challenge. Right now there is nothing to buy. If there was a dramatic increase in opportunity to allocate capital, we do not know how Greg Abel will respond. I cringe at making statements like this: given how many others understand Berkshire better than me and have owned it longer and made way more owning it. However, I will say, that in the almost three decades watching Buffett and Munger, I have observed a complete lack of appreciation from market participants and commentators, at just how aggressive and patient they were. Greg has the additional disadvantage, in that he is taking over the greatest hand that was ever played in the investment world. I would not be surprised if he had the patience to wait and the intelligence and preparedness. But you have to act. So many of Buffett’s big moves were completely unexpected. That independent thinking and conviction was extremely rare. We don’t know if Gregg will be aggressive when the price is right. That’s just one challenge on the capital allocation front for the market to worry about. Another is if he does one or two things and gets unlucky, or worse makes a mistake. The market would take that very badly and would demand dividends and change in leadership etc.
. Global recession and US recession. Berkshire is fully priced. Any general economic weakness could further dampen operating results and investment values.
. Technology. It’s not hard to see Berkshire with a glass half empty outlook for some of its old world businesses and how they could be disrupted.
The above are things investors might think about Berkshire. They might not be true and the list ignores all of the glass half full reasons that Berkshire is a fine investment. even at current prices. e.g. financial strength, insurance position, shareholder friendly, culture, management quality and momentum. Berkshire after Buffett remains: a kingdom. Full of like minded individuals and that matters.
I selfishly hope that the market does turn bearish on Berkshire but it probably won’t. If it did, I would double my position with little hesitation, if it went on sale as has happened a few times before. But for now I’m not hugely excited about the return from here. I’m even less excited about the index. And acutely aware that most people and definitely including myself, are unlikely to pick stocks that as a group, will outperform Berkshire.
No. of Recommendations: 4
These people handle long term investments???
Under $1B of A shares traded (1200 of them).
$8B of B shares traded (16+M of them).
