Is Berkshire Hathaway (BRK-A) an excellent investment choice?
Vltava Fund, an investment management firm, has released its Q3 2021 letter to investors – a copy of which can be downloaded here. In its letter to investors for the third quarter, Vltava Fund mentioned the two companies they recently owned and provided updates on the fund’s assets at the end of the last quarter. You can take a look at the top 5 holdings of the fund to get an overview of their top bets for 2021.
In Vltava Fund’s Q2 2021 letter to investors, the management company mentioned Berkshire Hathaway Inc. (NYSE: BRK-A) and discussed its position on the company. Berkshire Hathaway Inc. is a multinational conglomerate based in Omaha, Nebraska with a market capitalization of $ 629.4 billion. BRK-A has achieved a return of 19.38% year-to-date, while its 12-month returns are up 29.93%. The stock closed at $ 418,539 per share on October 5, 2021.
Here’s what Vltava Fund has to say about Berkshire Hathaway Inc. in its Q2 2021 letter to investors:
“Berkshire Hathaway is and always will be associated with the name of Warren Buffett. Writing about what Buffett has created in his 60 years at the helm would be like hauling coal to Newcastle. (The most detailed account is offered in this year’s spring book by Adam Mead: The Complete Financial History of Berkshire Hathaway: A Chronological Analysis of Warren Buffett and Charlie Munger’s Conglomerate Masterpiece.) That would also be looking back, this which, while a potential problem common to all of these corporate stories, given Buffett’s age, which is all the more evident in the case of Berkshire. Fortunately, we know who will lead Berkshire after Buffett, so it will be better to say a few words about this chosen successor. Or perhaps it would be better to say successors. Berkshire will be in the hands of the four people named above. All four are supported by very successful careers which to a large extent have been directly linked to Berkshire Hathaway.
The future CEO will be Greg Abel. Abel has worked for what is now Berkshire Hathaway Energy since 1992 and has been its CEO since 2008. He has played the role of the lion taking Berkshire over the past two decades from virtually nothing to become a major energy player with 90 billion dollars in assets. As Abel’s main task as CEO at the holding level will be asset allocation, his tenure at BHE is excellent preparation and he carries with him an excellent newsletter to start.
The most valuable part of Berkshire remains its insurance business. He is unquestionably a world leader, and much of the credit for that goes to Ajit Jain. He has been at the helm since 1986 and what he has built over time is unparalleled in the industry. Buffett once said, “If Charlie, I, and Ajit are ever in a sinking boat – and you can only save one of us – swim to Ajit.” I think that speaks for itself, and it’s a good thing that Ajit Jain continues to stay in his role and create additional value for Berkshire shareholders.
Berkshire’s publicly traded portfolio, which now totals around $ 500 billion, will be in the hands of Todd Combs and Ted Weschler. Both were already high performing portfolio managers before Buffett chose them as future successors. Combs has been with Berkshire since 2010 and Weschler since 2012. Since then, both have managed smaller but growing portions of the Berkshire portfolio. I think they will continue to be excellent. If the greatest living investor chose them as his successors from a plethora of candidates, one could hardly wish for a better testimony.
This quartet will therefore lead Berkshire Hathaway after Warren Buffett has left his post. There is only one Buffett, and there will be no other like him, but I imagine all the same well enough that the quartet of his successors will collectively be even better than this Son of the Most High. . “
Pixabay / public domain
By our calculations, Berkshire Hathaway Inc. (NYSE: BRK-A) ranks 12th on our list of the 30 most popular stocks among hedge funds. BRK-A was in 116 hedge fund portfolios at the end of the first half of 2021, compared to 111 funds in the previous quarter. Berkshire Hathaway Inc. (NYSE: BRK-A) has generated a return of -0.91% in the past 3 months.
The reputation of hedge funds as savvy investors has been tarnished over the past decade, as their hedged returns could not keep up with the unhedged returns of stock indices. Our research has shown that small-cap hedge fund stock selection managed to beat the market by double digits every year between 1999 and 2016, but the margin for outperformance has shrunk in recent years. Nonetheless, we were still able to identify in advance a select group of hedge funds that have outperformed S&P 500 ETFs by 115 percentage points since March 2017 (see details here). We were also able to identify in advance a select group of hedge funds that underperformed the market by 10 percentage points per year between 2006 and 2017. Interestingly, the margin of underperformance of these stocks has increased in recent years. Investors who are long in the market and short on these stocks would have reported more than 27% per year between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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