OK I said undervalued, everybody threw out numbers for under performance. Berkshire has built great value, but not had great success with its stock price. People want to chase performers and dividend payers.
These must be the same people who buy proven performers like CISCO at 100, real estate in 2005, and now Gold at $1,700 per once. Brilliant. Oh, and now the fad stock "divys." Wait until dividends are taxes at a 45% rate. Those stocks will plummet and "divys" will go back out of favor. No rocket science needed there.
But, notwithstanding, let's go toe to toe with the "under performance" crowd. Below are the S&P vs. Berkshire winning results for the last periods indicated:
5 days: Berkshire
3 months: Berkshire
6 months: S&P
1 year: Even
2 Years: S&P
3 Years: S&P
5 Years: Berkshire
10 Years: Berkshire
Every other 5 year period: Berkshire
All-Time: Berkshire 4-1.
Looks like other than in or around the period years 2-3, it is pretty much a blowout in Berkshire's favor.
Analogy: You are watching a football game. The home team leads 14-3 after Q1, 35-10 after Q2, 65-13 after Q3, and for 6 minutes in the 4th quarter gets outscored 14-3. The fans all boo, say the home team is washed up and will continue to play poorly despite the fact that they just rested the starting team and drafted 3 new star players, not to mention just scored a touchdown. It's now 72-27. OK that does not tell the story. Actually to be analogous to the data disparity, it's 110-27. And the 14-3 brief period of being outscored was more like 14-10.
Sorry to burst da Klown's bubble noses with da faKts. Oouucchhh!
Check the stats. Look at
1. Any period within the last year relative to the S&P.
2. Underlying value of Berkshire's stock portfolio at record highs.
3. Underlying value of 'side bets" including derivatives, BAC, etc.
4. Earnings at or near record.
5. Stock price relative to book value: PB = 1.19 and that will fall based on the upcoming earnings report. We still have lots of room for PB multiple expansion with little downside risk with the 1.10 share buyback.
6. Housing is improving. Berkshire's housing-related businesses will be coming back.
Anybody still saying, buy those high flyers, Facebook, Netflix, Cisco, Chipoltle?
As I pointed out to the myopic community just 6 months ago, time would prove the value of Berkshire. It already has. In case you have not been following, Berkshire is once again the top of the top dogs. everything else fell while Berkshire not only did not fall, it prospered. So much for short-term myopic thinking, huh?
Update: Over the last 6 months Berkshire is up 16% vs. 6% for the S&P.
Just as I said, over and over, eventually rising equity value MUST be translated to stock value. The stock value is now mirroring what happened with ballooning underlying Berkshire asset values 6 months ago.
BRK is performing *relatively* well because some of its top holdings have finally begun to perform; ala KO, AXP, WMT, etc... I wouldn't consider BRK's performance (or the performance of its holdings) too terrbily impressive, seeing that BRK, along with most of its top holdings traded higher years ago. PEs and BVs continue to contract; this trend is likely to continue.
Here we are one month later since my last UNDERPERFORMANCE REPORT. See my June 8 post for full details of the prior "underperformance."
What has happened since then.
30-days: Berkshire is up 3% vs. 1.5% for the S&P.
90 days: Berkshire is up 7% vs. -1% for the S&P.
Berkshire stock and its book value and its projected earnings all are at all time highs.
That's just horrible. Next thing you nutcases will be talking about is how it is all unfair, manipulation, and conspiracy against you, the stupid uniformed little guys, who had exactly the same information and opportunity the rest of us who took it had. But your own stupdity and myopia must be everybody else's fault, right?
Here is my last year update to Berkshire's ongoing underperformance report.
Since mid-July last year, Berkshire is up 37% vs. 23% for the S&P.
Just as I said, over and over, eventually rising equity value MUST be translated to stock value. Berkshire's business are killing it, and it was only a question of time before the stock price reflected same, just as I said it would happen. And Berkshire has made so many great moves in the current year, more gains are yet to be realized.
UPDATE: More data confirms the trend. Berkshire is outperforming the S&P consistently and recent "under performance" has reversed. To wit as of today:
Past period winner:
5 days: BRK
3 months BRK
6 months: S&P
1 year: BRK
2 Years: S&P
5 Years: BRK
BRK wins 4 out of 6 periods including the most recent quarter and this week. Long term, it is even worse for the S&P. Berkshire under performance was a short term anomaly. The same has happened even recently to steller performers like Apple and Google. Every great stock will have periods of underperforming the S&P. The stupid people look at those with myopy and say, its all over. The smart people see those dips as buying opportunities. If anyone listened to my argument made months ago, they'd be well ahead of the S&P right now. Berkshire has hardly dropped at all during the recent downturn. Contrast that with the high flying stocks and indices. Berkshire doing well just as I said it would. End of story.
Berkshire is outperforming the S&P averages in virtually every period with a few minor exceptions in the 2-3 years ago period.
And even more, its equity (book value) is growing faster than the S&P returns, such that downside risk has been virtually eliminated.
UPSHOT: While outperforming the S&P, I also have added Geico market risk insurance protection at no additional charge. I LOVE IT!
No idea what 'case' you want somebody to hold your hand about? Oh well, not my worry.
Anyways, back to the subject!
Q. Are you joking with your error-filled diatribes about value? They provide--intentionally, I'm saying--some much-needed comic relief for the board. Correct?
Are you joking? For people who can only place bets on the score for the next quarter, only the next quarter of the game matters. The final score is irrelevant for people who don't have a time machine or a bookie willing to take bets on what will happen in 1975.
You have a severely skewed sense of humor. Having some fun is one thing, but what if somebody out there bets real money on something that's just an elaborate practical joke?
"only the next quarter matters"
= Buy Netflix $300
= Buy Chipotle $400
etc. etc. etc.
OK, let's take your statement at face value. Berkshire beat the S&P in the last quarter, and is poised to repeat this quarter. So I take it you bought Berkshire 3 months ago? Awesome! Then what are you debating with me? Don't waste my time!