gtmeouttahere said:
Does anyone have any feedback on the a and b funds. I've done some research but can't really find what I'm looking for.
Can you tell us what you're looking for?
BRK/B is 30% of our retirement portfolio and half our kid's college fund. Although it's "underperformed the S&P500" I don't know what the heck it has in common-- except that Buffett discusses its performance relative to that index. If BRK was a mutual fund it'd be the 10th largest with one of the longest-running managers. This particular active manager has an ER that's quite a bit lower than the pack and we like his value approach. We started buying in 2001 and our cost basis is $2213/share. We're selling off another mutual fund for our living expenses now (Tweedy, Browne) so we won't get around to selling off any BRK this decade, and maybe not the next one either.
You can read the rules on the A/B shares
here. We chose the "B" shares because $90K is quite a bit of a chunk of change for us to sell at one whack. You'll see a bit more volatility in the "B" shares as they're arbed but we don't worry about that. I'll point out that volatility as a measure of technical analysis for this stock is worthless due to its thin trading volume, and if you're planning to trade the stock on TA then at some point your analysis will get hammered by that lack of volume.
As Dan has pointed out, Buffett will be 76 on 30 August. Charlie Munger is in his 80s (82? 83?). Buffett says that investing is one of the few activities where your skills improve with age, and he claims that he's in excellent health, but he's also improved his disclosure of the succession plan in the
latest annual report. It's worth noting that Berkshire has had managers retire but none have quit, and several have been with him for decades. The succession controversy among the top four seems irrelevant to me when you consider their areas of expertise, some of which have been outperforming Buffett (Lou Simpson).
I'm not sure where Soon is getting his asset values but you can play with some numbers
here. Although the results vary from 55%-106% of the share price, I'd say that shares are selling at a 20% discount to the company's breakup value. A controlling number of shares will be held by Buffett's charitable trust when he's done with them, so I don't know that "breakup" will ever occur.
I'm pretty sure that when Buffett wakes up demented or dead that there will be some of the most horrific volatility ever seen. I wouldn't be surprised by a drop of up to 50%, and I sure hope I'm near a computer or a phone when it happens so that I can buy before everyone else jumps onboard. Over the decade after Buffett's death we'll learn just how good he's been training his successors, and I think we'll find out that the new kids (in their 50s & 60s) will do just fine. But there are other investors with similar approaches who are much younger-- take a look at the Danaher brothers (DHR) and Eddie Lampert (Sears).
Buffett bet big on the dollar's decline in 2004 and got hammered 10-15% in 2005. I don't know where he is for 2006 (he usually discloses positions long after he's closed them out) but he's probably still short. He tends to take a very long-term view and doesn't worry about a year or two of underperformance, but he also acknowledges that he uses traditional methods of valuation instead of "newfangled" ones, so his views on the dollar and the trade imbalance haven't come to pass as quickly or as severely as he's warned about them. He made an obscene pile on junk bonds in 2002-2003 when many were afraid to touch them, so I think his dollar speculation will be a reprise of junk bonds.
Another current fuss about Berkshire is its high cash position, $40B or so, and Buffett's seeming inability to remain fully invested. In the last 10 years he's transformed Berkshire from a stock-holding company to a conglomerate of corporations, and he seems to be continuing that trend. Latest purchases have been mainly energy companies but he doesn't hestitate to snap up anything that's discounted. (I believe one of the posters on this board has a kid who was part of the financial analysis team that persuaded Buffett to buy Clayton Homes, and as a result his class was awarded "B" shares.) I believe that if the world goes to hell again then Buffett will be buying, but otherwise you'll always hear complaints about the company's high cash position.
Other research resources include
here (ignore the ads) and
Sandman's Place. M* also runs a discussion board on this topic but it's not very active.
Which "new book" are you referring to? Alice Schroeder's impending biography is rumored to have pulled down an advance of something like $7M but the publication date for that is at least a year off. That's the latest written with his apparent cooperation, and other than his annual reports I'm not aware of anything else recently written by Buffett.
