Some commentators have been quick to say he’s losing his touch. But BRK is a hugely diversified company with a finger in many lucrative pies. This is its first quarterly loss in 8 years – a mere blip in a fantastic long-term track record. And it’s justifiable that the plunge in global stock markets has affected his company.
Take a look at the chart below. It shows Berkshire Hathaway’s (ticker: BRK; red line) performance for the past 3 years, versus the S&P 500 (green line). You can see BRK’s consistent outperformance of the broader market by a significant margin. Even now, it’s outdoing the S&P 500 by close to 25%.
Buffett’s Berkshire Hathaway is on a better
run than the markets
Buffett is a contrarian investor with an uncanny knack for picking high-quality stocks and running with it for the long-term. This pays off.
Berkshire shares are undervalued on a price to book value measure. The company has a strong balance sheet and diversified portfolio of businesses which should limit the downside to the shares.
BRK’s long-standing equity positions are strong. They’re the top shareholder in American Express and Wells Fargo (the fourth-largest U.S. bank). They’re also the biggest owner of Goldman Sachs, which has surged 95% since March 9, and the third-leading investor in U.S. Bancorp, which has climbed 68%.
Buffett believes in value investing. He buys companies that have steady cash flow, low gearing, autonomy and multiple sources of income. He won’t invest unless he understands exactly what the company does.
Crucially, this ‘intellectual investor’ advises that it’s always better to buy a wonderful company at a fair price than a fair company at a wonderful price.
You can’t argue with that.
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