What I Wasn’t Looking For

Image Credit: Sean MacEntee || Should I have gotten a picture of a guy in a bathrobe?

Dear Friends,

I may occasionally write opinions that are controversial, but I try not be controversial as a rule. So, when I wrote my piece yesterday, I was not looking to make any huge statement regarding Berkshire Hathaway. Yes, I might be a little disappointed in Buffett’s lack of action, but I still think very highly of him. Of all investors alive today, he is the one who most deserves to be studied. Ben Graham had no better pupil. Same for Phil Fisher. And as far as Henry Singleton goes, Buffett has outdone him.

As such, I was more disappointed than excited when I saw the article at Marketwatch entitled Warren Buffett’s ‘outdated view’: One longtime fan is considering dumping his entire Berkshire stake.

I don’t mind media coverage of my blog. Really, I like it. And yes, I am a longtime fan of Buffett who might sell the remainder of my stake in BRK, but why should anyone care about that? I don’t manage that much money.

This is what I tweeted:

Yes, I sold half of my stake in BRK recently, but that only removed what I had added during the crisis. The amount I hold today is roughly the same as what I held on January 1st, 2020. I am sorry that I didn’t say that yesterday.

I had a thesis that Buffett would take advantage of the crisis, and buy some amount of stock. That was a major reason why I doubled my position; the secondary reason is that BRK is a safe asset.

That Buffett did nothing surprised me, and I sold half for a moderate gain. If Buffett has such a long time horizon, he missed some opportunities.

I want people to read what I write, but I hate sensationalism. Why else do I have relatively boring headlines for my posts? I know how to write exciting headlines and I don’t do it. I am here to educate in a friendly way. I am not here to be thrilling.

Anyway, enough. I wish Buffett the best, and hope his plans work out. The challenge for him in the present environment stems from the same reason that the Fed replaced J. P. Morgan. Now the Fed is replacing Warren Buffett.

And, for the cases where Buffett is buying healthy firms at a reasonable price, private equity takes his offer as a cue to outbid him… because Buffett never pays top dollar. Unless a private owner doesn’t want top dollar, Buffett will never win. He doesn’t participate in auctions.

Don’t get me wrong, I admire the discipline. But when your ability to source cheap assets goes to nearly zero, isn’t it time to re-evaluate whether the world hasn’t changed around you? After all, Buffett has reinvented his strategy several times already. Time to reinvent yourself again, Warren.

Full disclosure: Long BRK/B for clients and me