Berkshire Hathaway

  • 13 Jul
    This Is What Could Happen To Berkshire Hathaway After Buffett

    This Is What Could Happen To Berkshire Hathaway After Buffett

    • BRK’s companies aren’t reliant on Buffett when it comes to their performance.
    • Buffett leaving leads to two uncertainties, but the outcome of both are positive.
    • The power of BRK lies in the quality of its businesses and huge cash pile. At this point, even an idiot at the helm of BRK would do well.

    Introduction

    One of the biggest concerns surrounding Berkshire Hathaway (NYSE: BRK.A, BRK.B) is what will happen after Buffett and Munger.

    To keep our karma positive, I’ll write this article under the assumption that Buffett gets an offer from Bill Gates to be the project manager of Microsoft’s (NASDAQ: MSFT) new multi-billion virtual reality Bridge game project. I think something like this could make Buffett leave BRK as I wish him many more decades of health. More →

  • 12 Jul
    Want A Higher Return With Less Risk? This Company Is A Better “Buy & Forget It” Investment Than The S&P 500

    Want A Higher Return With Less Risk? This Company Is A Better “Buy & Forget It” Investment Than The S&P 500

    • Berkshire Hathaway offers similar diversification, a better book value, higher growth, and it doesn’t do stupid buybacks.
    • Share this article with those you know who are heavily invested in the S&P 500 and are buy and forget it investors, they’ll appreciate this and it might change their lives.

    Introduction

    The predominant investing paradigm is to invest in the S&P 500 because of its low risk and  good diversification, and because it has done well in the past. Given this, most buy and forget investors simply put their money into the S&P 500.

    Now, what if there was an investment that offered the same level of diversification, less risk, and a higher return? It would be logical for the buy and forget it investor to immediately invest in such an investment vehicle. More →

  • 03 Jul
    Why Buffett Bought Store Capital & What We Can Learn From It

    Why Buffett Bought Store Capital & What We Can Learn From It

    • Analyzing Buffett’s purchase can give us excellent insight into how good investments can be found in any environment.
    • STOR still offers a 7.7% AFFO yield for 2017, a 5% dividend yield, and expected growth of over 5% per year.
    • REITs’ performance is closely related to interest rates, but when you find one where the yield is satisfying and the risk is low for your portfolio, well, then you don’t have to care much about what’s going on in the economy or with interest rates.

    Introduction

    If you’ve been reading Investiv Daily for a while, you know I’m always using Warren Buffett as an example of investing excellence.

    Buffett has been doing the same simple things over and over again for the last 52-years, thus since present management took over at Berkshire Hathaway (NYSE: BRK.A, BRK.B), and has been extremely successful with average yearly gains of 19% compared to the S&P 500’s 9.7% with dividends.

    So when Warren Buffett buys a specific stock, it’s important to analyze the purchase in order to learn as much as possible from it. More →

  • 08 Jun
    How To Invest For Your Children Or Grandchildren

    How To Invest For Your Children Or Grandchildren

    • Whether investing for children or retirement, the goal is to maximize portfolio value at a specific future date, not now or in the next six months.
    • Be wary of fees as they eat up a huge part of your future wealth. I’ll show how to avoid them.
    • Temporal diversification and buying companies that create value will do wonders over time.

    Introduction

    Our greatest treasure is, of course, our kids. I’m a proud father for six months now and I must say that every day since my child was born has been the most beautiful day of my life.

    In that spirit, I want to provide the best possible environment for my kid to grow up, but also to enable him to do everything he wants when he is older. This has me, and probably many other parents or grandparents, already thinking about college tuition money, start-up capital for a business venture, helping with the down payment for a house, or simply paying for a wedding or a honey-moon. The notion that you can build a substantial nest-egg with small monthly payments is very attractive to me and will also provide a great educational experience to my kid as it will show him how small actions over a long period of time can bring huge results. More →

  • 26 May
    Corporate America’s Focus Isn’t On Shareholder Value Creation

    Corporate America’s Focus Isn’t On Shareholder Value Creation

    • Earnings haven’t grown in the last 10 years. What is corporate management doing?
    • A temporarily higher stock price isn’t good for the majority of investors, especially those investing for the long term and retirement.
    • Buybacks are idiotic, management pays $ 3million for a home they can build for $1 million.
    • There is only one company that does smart buybacks.

    Introduction

    There’s a huge problem affecting corporate America that nobody is seeing because most people think in positives and negatives, and can’t think on an relative scale. What do I mean by this? Well, when shareholders judge management, they look at whether the bottom line is positive and in line with what the competition is doing. Nobody is assessing whether it could have been much better.

    We expect only the best from our favorite athletes and we hope our children develop to their full potential but when it comes to corporate management, we remain mostly silent and accept whatever they throw at us. More →

  • 16 May
    When CEOs Become Delusional: The Case of Unilever’s Polman

    When CEOs Become Delusional: The Case of Unilever’s Polman

    • Unilever CEO Polman declared himself more competent than Buffet just because Unilever has outperformed Berkshire in the last 8 years. The funny thing is, Unilever outperformed thanks to Buffett.
    • Not only that, but Berkshire outperformed Unilever on revenue and earnings while at equal valuations, Berkshire would also largely outperform.
    • The 8-year bull market has clearly gotten into some CEOs’ heads. This creates a very dangerous situation for long term shareholder value creation.

    Introduction

    In an interview with Jim Cramer, I was thunderstruck to hear Unilever’s CEO (NYSE: UL), Paul Polman, tell the world that his returns have been better in the last 8 years than Buffett’s Berkshire Hathaway (NYSE: BRK.A, BRK.B). More →

  • 15 May
    Why You Shouldn’t Love Dividends

    Why You Shouldn’t Love Dividends

    • It’s human nature to like immediate compensation. When it comes in the form of a dividend, even better.
    • However, there are far more disadvantages than advantages. Dividends are another indication of how irrational markets are.
    • We can’t even imagine what Microsoft or Apple would look like if their cash had been reinvested and not used for repurchases or dividends.

    Introduction

    When a company announces increased buybacks or hikes its dividend, the market usually reacts very positively. However, there are some people that aren’t so enthusiastic about dividends and especially buybacks as they see the former as a poor allocation of the company’s cash and the later as a fast way to destroy shareholder value. In this article, we’ll analyze why dividends aren’t as good as they seem at first sight. More →

  • 31 Mar
    Don’t Give Up On Stock Picking. Do It The Right Way.

    Don’t Give Up On Stock Picking. Do It The Right Way.

    • Passively managed funds are extremely dangerous as their positive performance is self-reinforcing due to the huge positive net inflows.
    • But don’t jump to actively managed funds as, on aggregate, they will always underperform the market in the long term because they are the market.
    • The only solution is to invest like a business owner. You can do this by investing yourself or by finding an active manager who has the same principles.

    Introduction

    A recent Wall Street Journal article described how BlackRock (NYSE: BLK) is switching to robots from using humans to improve its stock picking for its actively managed funds. BLK’s reasoning is that its stock picking unit lagged in performance and has had many withdrawals that cut assets under management to $275 billion from $317 billion in the last three years despite the S&P 500 surging 27% in the same period. The hope is that robots will perform better at lower cost. More →

  • 24 Mar
    Using Intrinsic Value To Measure Portfolio Performance

    Using Intrinsic Value To Measure Portfolio Performance

    • The market is irrational and can’t be used as the only measure of investment performance.
    • Imagine if all the businesses you own suddenly delisted, you’d look at their value in a different way.
    • Intrinsic value is based on the business owner perspective which is essential for reaching healthy long term returns.

    Introduction

    This past Tuesday was a bad day for stocks with both the Dow and the S&P 500 falling more than 1%. This isn’t very significant for now, apart from the fact that it broke the longest run the S&P 500 has ever seen without a 1% decline (64 days in comparison to 34 days in August 1995). However, it’s an excellent introduction to today’s topic on how we measure investment performance. More →

  • 01 Mar
    Value That’s Measured In Millions

    Value That’s Measured In Millions

    • My goal for what I write on Investiv Daily is to increase yearly returns by 4 percentage points for those who want to remain invested in the U.S. and diversified across sectors, by 8 percentage points for those who want the same but dare to go international, and by 12 or more percentage points for those who want to look at specific stock investments.
    • History, statistics, the Buffetts of the world, macroeconomics, cycles, etc., show that returns of above 16% on an annualized basis are possible, so why should you settle for average?
    • The current investing environment praises index or average investing. However, I would wait for a complete business and market cycle to pass before praising an investment strategy. It’s fun how quickly people have forgotten about 2001 and 2009.

    Introduction

    You probably know that I’ve been writing here on Investiv Daily for a while now. Apart from the content and commentary that I publish here, I have a very specific goal in mind. My goal is to eliminate the word “average” from your returns and without increasing your risk. More →

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