Sunday, March 05, 2006

Berkshire Hathaway

I am reading Warren Buffett's annual letter and for a change I like what I see. I also checked the chart of Berkshire stock and maybe now is the time to buy. Both I and my Mom have been Berkshire shareholders but we both sold. I needed the money during my 2002 financial crisis and my Mom sold all her shareholdings in individual stocks after my father died.

Berkshire is the kind of stock that I am beginning to collect for a core portfolio, the aim of which is quality assets which shouldn't fluctuate too much with the stock market and can be held indefinitely for tax effective income and long-term capital gains and don't need to be traded in and out of with market conditions. Another recent buy was Clime Capital in Australia (CAM.AX). The manager of that firm - whom I met and actually applied for a job with - is a Buffett worshipper. It is basically a closed end fund and he is doing well so far with his portfolio but the stock price is far below NTA. The price has gone up since I bought. Other assets in this class I own are:

Loftus Capital (LCP.AX) - current strategy is to be a micro size down under version of AMG
Platinum Capital (PMC.AX) - effectively a listed global long-short hedge fund
Everest Brown Babcock (EBB.AX) - a security that includes a 30% share of a manager of funds of hedge funds and a share in such a portfolio of hedge funds
Challenger Infrastructure Fund (CIFCA.AX) - invests in infrastructure including gas pipelines, broadcast towers, and now bidding on a ports deal all in the UK.

All these except PMC.AX are trading below NTA.

Another thing that all these businesses have in common is that the managers have significant stakes in the shares. This is of course true of Berkshire too. Berkshire is likely undervalued relative to the assets it holds.

The TIAA Real Estate Fund might also fall into this class. At least I am thinking of it in that way.

All of them only constitute about 14% of net worth at the moment.

I am looking to add more of these type of investments in any upcoming market downturn.


StealthBucks said...

Love BRk B and A as well, can't buy it. I call it the Jesus factor. Buffett is on the cover of everything every where. Revered for his knowledge. Berkshire reported huge net profit improvements. Stock movement nadda zippo zilch. Warren is right up there with the big guy.

It reminds me of Jack Welch and the cover of everything. look at GE today. Love GE too but it's taken how many years for the stock to rebound from the Jack effect. Emotion often drives the market and emotionally everyone is waiting for Warren to have a heart attack and buy the shares cheaper.

mOOm said...

BRK/B's chart looks good. I bought yesterday at $2920. I feel it might even go up when Buffett goes. The next manager might be more rational and pay a dividend, spin-off subsidiaries etc.