Berkshire Hathaway

[athena53]

I was reluctant to buy BRK years ago because of concerns over Warren's age. My advisor (yes, there's a reason I keep one!) said that once when there was a rumor that he was nearing the end the stock price dropped by either 5 or 10%, I forget which. It's up over 100% from when I bought it. Can't get the history easily because it's since been transferred from another brokerage but I think I bought the first shares about 15 years ago.

I can handle a 10% drop and I'd guess that some of the uncertainty over Buffet's longevity is baked into the price already.

[Sunset]

I suspect the stock will go up when Warren dies, as he has refused to pay dividends (although he says he likes getting them). I think the new person could easily start a 2.5% dividend and the stock would increase in value due to demand from income seeking investors.

[GrayHare]

Quote:

Originally Posted by Sunset I suspect the stock will go up when Warren dies, as he has refused to pay dividends (although he says he likes getting them). I think the new person could easily start a 2.5% dividend and the stock would increase in value due to demand from income seeking investors.

BRK is one of few cap-gain-focused, zero-dividend equity investments available. Many people hold BRK for that tax-efficient approach. I would sell my holdings if BRK started paying divs.

[Sunset]

Quote:

Originally Posted by GrayHare BRK is one of few cap-gain-focused, zero-dividend equity investments available. Many people hold BRK for that tax-efficient approach. I would sell my holdings if BRK started paying divs.

I have also appreciated that aspect as well, in many ways it's better than a non-deductible IRA (no limit on contribution, tax free growth, and even better is low taxes on cashing out LTCG).

Still there are lots of people who see the inconsistency in Warren's view on dividends and lots of people who view dividends as a (+) so it would push up the stock.

[bobandsherry]

I get why Warren is well respected businessman. However, I've watch Berkshire and seen that has consistently under performed JPM which is one of my major holdings. Looking at value of $10,000 invested over the years:

10 year return, BRK.A $21,584 (8.0% annual return) vs JPM $32,950 (12.67% annual return).

5 year return BRK.A $20,115 (15.03%) vs. JPM $27,380 (22.36%).

1 year return BRK.A $11,822 (18.39%) vs. JPM $12,968 (29.97%).

So I guess this indicates Warren is a good business man but he hasn't generated the best return for shareholders. Based on relative performance Dimon does a better job especially for his shareholders and even more interesting given the challenges that financial service business has had to overcome in the past 10 years.