Why does this fund run by the most respected (and successful) investor of all time show a relatively "tiny" total capitalization of less than 200 million? By contrast, Yacktman's Focus fund shows a total cap of 10 billion.
Both the Oracle and Yachtman use a cautious, conservative approach, avoiding technology and trendy stocks in favor of companies they know and understand. Yachtman makes few trades, staying with companies like Pepsi forever. But Buffet is far more thorough and observant in his search for tomorrow's contenders, looking beneath the numbers and quarterly reports to find genuine value and powerful potential. Dairy Queen and Coke may be familiar names, but most of his companies are likely to be unknown discoveries.
Since Yacktman has recently raised the rates for what is essentially a passively managed, safe and steady, index fund, I've decided to pull out and go with BRK-B. But I'm puzzled that so few others haven't done the same. Recent performance has been good (not great, but better than Yacthman Focus fund). Is the problem one of promotion or perception?
Many buy BRK-B. But only a few bought BRK-A. If you look at the price of BRK-A you will understand. However, this stock is very stable. I never saw it drop over 2% only any trading day. And if you look at the chart, it return at least 10% each year. Also, it is undervalued.
You may be right. I don't know the numbers, but I suppose it's possible that a relatively small number of investors own BRK-A and that a greater number of "litte," or "average," investors own the more affordable (by an extremely long shot) BRK-B. Still, it seems that all of the little guys (like me) should produce a capitalization that's more than 200 million dollars, esp. when so many "blue chip" mutual funds show total capitalization over a billion dollars.
Actually, I have no complaints about price action. With Buffett it's the longer term outlook that counts most. Moreover, he's done all right during the present bull market, even though he's not out to hit home runs with risky speculative plays.
« ... this stock is just not moving. »
It's obvious, isn't it?
The number of dumb bunnies, who are willing to pay a significant premium over what WEB would pay, is drying up.
Correct me if I'm wrong, but isn't WEB's stock buyback bid: "less than 1.2 times book value per share"? As of 28Mar2013, BRK-B's book value per share was $80.35.
Not moving? What are you talking about? The stock was below $85 a year ago. It's made good gains in one year. It's a big company, so it's going to be harder for them to beat the S&P 500 for years to come.
That's a good point. I'm not in it for the income. Also, Buffett is very open about his portfolio, etc., so investors may prefer to pick and choose from it. Of course, you could do the same with a fund like Yacktman's, which is usually limited to 30 stocks--a number probably close to Buffett's.
You have to add BKR-A's market cap, too, to get the full picture.
And Berkshire isn't a fund - it's made up of many wholly owned kick #$%$ companies that throw off tons of cash - Burlington Northern RR, Geico, a few reinsurance companies, and many others. And it also has a portfolio of investments, including Coke, Well Fargo, US Bank, and lots of others, that sometimes do well and sometimes don't - which cause earnings to fluctuate quite a bit from quarter to quarter - in an unsteady but overall upward trajectory. I have no idea if it's performs better or worse or is more or less risky than the fund you're comparing it to, but I suspect it's an apples and oranges comparison.
I realize it's not a "mutual fund," but I've seen at least one advisor recommend BRK-A as an alternative to investing in a mutual fund. Many mutual fund investors tend to become "anxious" about buying stocks on the exchange, fearing a precipitous loss. Still, I'm inclined to go along with the advisors who recommend BRK-B over a blue chip mutual fund.
I lost a lot of money in mutual funds before getting wise to the advantages of stocks. Mutual funds can be just as volatile as stocks, or they can be hopelessly sluggish, and they carry extra management fees, sometimes even "load" fees of 5%. Finally, it's far more cumbsome to move your money out of a mutual than a stock. Should the market go into a free-fall, forget it. You'll be too late. Same if the market skyrockets.
So it's not hard to understand why the "wealthiest 2%" invest in BRK-A. What remains a puzzlie is the teeny tiny capitalization of BRK-B, which offers the average investor a chance to invest with the "big money," and with arguably the greatest investor of all time.