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- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 19
When looking at our current business, we have a bunch of SLOW growers.
A bunch of boring companies that are not going anywhere fast...up or down.
For people outside the Berkshire tent there is currently almost no reason to own this stock.
Sure, an average 3-4% revenue growth plus another 3-4% of increased operating improvements can lead to a nice slow and boring 8-9% annual earnings per share increase.
But I gotta believe that type of slow growth is not why Greg or anyone else would want the job.
Berkshire offers a different and possibly better type of launch pad than SpaceX.
No CEO in history has taken the helm of a $400 Billion war chest strapped to a business throwing off $50 Billion in additional free cash flow.
I'm looking for BIG things to happen FAST at Berkshire over the next 20 quarters.
I see an asymmetric opportunity with little to no downside, a conservative valuation, and an energetic CEO/dealmaker highly motivated to move the needle.
Let's hope Greg can Make Berkshire Compound Again!
No. of Recommendations: 14
I don't think Greg is going to be able to invest much more than his cashflow going forward over 20 years and I expect that much of that will go into BRK share repurchases between 1.3 and 1.5x P/BV. I hope that he can even invest all of his cashflow over 5, 10 and 20 years. I think our most likely good outcome is that in 7-9 years Berkshire doubles its market cap and can keep its cash at $400B in cash. The would be relatively better for a $2T market cap company than it does for a $1T one. But what will the ROIC of buying BRK at 1.4x BV be?
Slow, steady, boring growth might cause benign P/BV and P/E multiples and allow for significant buybacks. I hope that is the worst case and I think that will have a good outcome of 8-12% EPS growth. And maybe Greg finds 1 elephant or a couple rhinos in his 20 years at the helm. Those outcomes typically just cause more cashflow problems and how many elephants are going to be GREAT investments?
I think Berkshire is too well followed to give us Teledyn-like super-cheap buyback opportunities and returns but they should work out pretty well if people lose favor with it. A worse case might be that BRK just gets more and more expensive while its cash pile grows and grows with nowhere to go. It's hard to sit in an over-priced stock with limited opportunities and a dividend will not be tax friendly.
I'd be fine with 20 years of cashflow buybacks at 1.4xBV with modest growth of the core businesses. Just don't be stupid with the $400B or the cashflow, Greg.
No. of Recommendations: 27
When looking at our current business, we have a bunch of SLOW growers.
Yes. That’s how the corporation was built, brick by brick.
But I gotta believe that type of slow growth is not why Greg or anyone else would want the job.
I would guess Warren chose him precisely because he’s not the type to take a flyer on some cockamamie fad, but continue the kind of stability and reliability that Berkshire is famous for.
I see an asymmetric opportunity with little to no downside
Said the CEOs of WorldCom, GE Financial Services, Westinghouse Financial Services, Lehman Brothers, AIG, Countrywide, Arthur Andersen, Nortel, Bear Stearns, not to mention the Mississippi Company, and South Sea company, among many others who were convinced they could get rich quick instead of get rich slow.
I’ll take my compounding lumpy, and slow, as opportunities arise with a huge capital bank, thanks.
No. of Recommendations: 3
"Just don't be stupid with the $400B or the cashflow, Greg."
This is the key. Not that I think Greg is stupid (obviously he is not) but I hope he continues with the conservative way we got here.
I'm not looking for outsized returns at my age. Just something I can draw down over 20-30 years, and maybe pass a little bit to the kids if possible.
No. of Recommendations: 1
it also seems unreasonable to expect that
- berkshire's next trade will rhyme with apple, which had already had a huge run.
- every such conservative trade will then become the greatest in history.
i.e., as per forever for berkshire, expect the sensible and don't turn down the quasi-miraculous !
No. of Recommendations: 2
I,and most people on this board share your sentiments that we want Berkshire conservatively managed moving forward.
That being said, there is so much money pouring into Berkshire that if it is not re-deployed, Berkshire will become dead money as an investment.
I'm betting that hindsight, and Abel's future accomplishments will show that Warren waited 15 years too long to hand over the reigns based on the simple physical and energy constraints of being NINETY FIVE years old, coupled with his own dis-interest in doing many of the unpleasant and unpalatable things needed to run an efficient and growing operation in 2026.
And let's not forget that while Warren was very precious about taking the bat off his shoulder to swing at pitches, those that he finally did swing at were not all home runs, specifically PCP, and Pilot.
Berkshire would have been far better off buying back shares or simply buying the S & P 500 Index.
Berkshire's real circle of competence has proven to be insurance, and the investment in publicly traded securities.
Abel is a proven deal maker as he illustrated in building Berkshire Energy.
I'm expecting a series of $10-15 Billion dollar deals that will gobble up much of the excess cash.
And if that elusive elephant does actually exist, I think it could be bagged relatively soon.
I'm looking for the stock to hit $2,000,000 a share in 5 years.
No. of Recommendations: 2
I would guess Warren chose him precisely because he’s not the type to take a flyer on some cockamamie fad, but continue the kind of stability and reliability that Berkshire is famous for.
Berk's largest single stock holding ever was Apple. Apple earnings and market cap grew at ~27% CAGR. Since then Berk is showing a lot of interest in Google which has had a Market Cap CAGR and annual earnings which have risen by more than 25% CAGR.
If AAPL and GOOGL are the kind of "stablity and reliability that Berkshire is famous for" I'm hoping Greg follows in Warren's footsteps.
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