Still Bullish on Berkshire?
Berkshire without Buffett? Many investors still struggle to picture that. How can it even exist without the famous Oracle of Omaha? The market is sending a pretty clear signal right now: $BRK is down about -15% from its ATH, shortly after Warren Buffett announced he would hand over the CEO role. The “Buffett premium” has faded, and caution has crept in.
That said, as I mentioned before, I think Buffett and his longtime partner Charlie Munger made a thoughtful choice. Their priority has always been preserving the legacy and ensuring the company thrives for the next 100 years, not just the next quarter. Greg Abel looks like a strong successor: decades of experience within Berkshire, direct mentorship from the best, and a clear long-term mindset. He’s also putting skin in the game, committing to invest his salary into $BRK shares, and aligning with Buffett’s philosophy including tb continued share buybacks.
On top of that, the company is well-positioned for future challenges. Berkshire is sitting on roughly $380B in cash, generating around $1B per month, largely parked in short-term bonds. The portfolio is becoming more balanced too, reducing exposure to Apple Inc. and Bank of America, while adding to Alphabet Inc.. It’s a setup that could work well heading into the next cycle.
To sum it up, I still believe Berkshire can deliver strong returns and potentially outperform the market. Over the past decade, it achieved roughly a 12.5% CAGR beating the S&P 500. If it can come close to that over the next decade, you’re looking at a potential 2x in about six years. Not bad, in my view.
That’s why I’m continuing to add to my Berkshire position via DCA. If it drops more than -20%, I’d likely increase my allocation even further.
What’s your take on Buffett’s baby? Are you leaning cautious, or bullish like me?