How Much is Too Much BRK?

[53anddone]

Interested in hearing from other investors who own BRK as part of their equity portfolio.

I believe in the long term power of equities but loath paying taxes on distributions. (Sure, you can own GOOGL and AMZN etc. which pay no dividends but I try and limit the amount of growth stocks I own to less than 15%).

Anyway, BRK stands unique in that it is a low beta stock that does not pay a distribution. However, over the years it has grown to be 20% of my investible assets. My next largest holding is at 4% and I'm pretty stringent about not letting any other equity climb above 5% no matter how much I love it.

Anyway, my question to other BRK shareholders how much of your portfolio are you comfortable with?

[Dash man]

I don’t personally own any BRK, but since it’s made up of many different companies, I’d treat it more like an equity ETF than a single stock.

[Sunset]

We have a bunch.
I look at it as an ETF and am not too worried about how much we have, it's more than 5% I think, but since there are multiple accounts I never bothered to add it up.

I was kind of low in tech holdings, but since ~19$ of BRK is apple stock, that problem has been solved for me.

[COcheesehead]

One rule of thumb is never more than 5% in any one investment unless the investment is diversified than look under the hood and see if they hold more than 5% of anything as well.

[Montecfo]

Have owned it before, but not currently. It is a fairly well diversified "closed-end fund" so I think you need to look through to the underlying holdings. Not so much the traded equities but the businesses fully owned (insurance, rail, industrial, etc)

You get a conglomerate discount which will be unwound some day maybe after Buffett passes or steps down And it may pay a dividend one of these days.

[Montecfo]

I would limit it to 10 percent I think. Not because of underlying holdings but just because it is a single legal entity.

My usual positions top out at 5%.

[RetMD21]

IDK how much is too much but I am at about 6% of total portfolio. I agree low beta and no distributions.

[athena53]

BRK is a little more than 1% of mine but I agree on not more than 5% and that it's more like a well-run mutual fund. I fell better now that Buffett has named his successors and they were up there with him and Charlie at the table at last year's Annual Meeting.

I've moved chunks into my donor-advised fund over the years, which is a good way to avoid getting killed on the capital gains. It's been doing so well this year I donated other securities instead.

[OverThinkMuch]

Is Berkshire that private equity firm run by Buffet? Only half joking, because he likes to buy entire companies. Berkshire's biggest drawback is its size, at 2/3rds of a trillion in market cap. When investing, that greatly limits the number of stocks where they can own a small percentage, and also make a difference in BRK's performance.

Which could explain the 2/5ths allocation to Apple stock (AAPL).
https://hedgefollow.com/funds/Berkshire+Hathaway

[dmpi]

I have 3% in BRK-B. I don't think I would want it to be more than 5% of my portfolio. It's the only thing I have that didn't get hit hard last year. I like it because it doesn't pay a dividend and it sort of goes the opposite way as the S&P 500 like Bonds (except for last year). I think it's really good for capping your investment income to avoid hitting unwanted thresholds.

[ERD50]

Quote:

Originally Posted by 53anddone Interested in hearing from other investors who own BRK as part of their equity portfolio. I believe in the long term power of equities but loath paying taxes on distributions. ... Anyway, my question to other BRK shareholders how much of your portfolio are you comfortable with?

I have a pretty high % in a taxable account, so that I'm not getting taxable dividends, which would limit the amount I can make in Roth conversions.

I couldn't tell you what % overall w/o looking it up, but I own zero % in my IRAs, to limit my exposure to any single investment. But BRK is still fairly diversified (well, relative to any single stock anyway).

IIRC, the % of BRK allocated to specific stocks may be misleading - the % quoted was a % of their stock investments, not a % of their stock price?

-ERD50

[Sunset]

Quote:

Originally Posted by OverThinkMuch .... Which could explain the 2/5ths allocation to Apple stock (AAPL). https://hedgefollow.com/funds/Berkshire+Hathaway

It's actually 20% of BRK is allocated to Apple, because Apple rose faster than a bunch of other parts.

It's 40% of their stock allocation.

[OverThinkMuch]

Quote:

Originally Posted by Sunset It's actually 20% of BRK is allocated to Apple, because Apple rose faster than a bunch of other parts. It's 40% of their stock allocation.

Thanks for the correction. I'm not sure where to find the value of companies 100% owned by Berkshire. Like a company acquired for $22 billion back in 1995, I haven't been able to find the current valuation. I mostly see articles focused on public holdings.

[Surewhitey]

I like BRK, but only own it through VTI & VTSAX where it's one of the top 10 holdings. Looks like it is just about 1.25% of assets.

[arcyallen]

I typically like the 5% max rule, but BRK is the one stock that breaks that rule in my portfolio. I'd suggest the only danger of having "more" isn't the strength of the underlying investment (which is very diversified), but the stock price swings. A single investment's price can still swing wildly, although BRK is known to be less volatile.

I'd be comfortable with 20%, but just remember that 20% in a single ticker -could- experience some wild price swings.

[Lsbcal]

This is not just one stock but a portfolio of stocks with a spread in the style boxes (as per Morningstar). Also it is going to react should Buffet or Munger die. Probably it is in good hands though.

To analyze this I would first put my portfolio into Morningstar's portfolio X-ray and see your entire portfolio's style spread (cap sizing, growth/value). Or you could easily compute it based on each holding's style box and weighting.

Then decide if this meets your objective (balanced, value tilted, etc.)

[WhenIsItTime]

BRK is interesting. They are so big, acquisition or internally developed businesses that move the needle are rare. They are active investing in ~40 stocks while running their directly owned businesses. This company could easily go the way of the generation challenge to family businesses. Shift to 2nd generation deferred by Warren and Charlie working 2 career spans each. Will be interesting to see stability/duration of 2nd generation. Momentum will carry it for a while, but leadership will be challenged to drive the behemoth as the world continues to change and deliver results in line with the legacy (or better than average).

[gcgang]

I think you could go 100% BRK. They’ve done a much better job than I, or the vast majority of mutual funds or ETFs, which BRK basically is, have done.