Friday File: Annual Review Part Three

More annual checkups on Real Money Portfolio stocks, including Berkshire, Kambi, GAN, Roku, Shopify, Brookfield and more...

By Travis Johnson, Stock Gumshoe, February 12, 2021


I’ve been falling behind on my Annual Review summations, so we’ll try to get to a bunch of them today for you… starting with what has usually been the largest holding in my portfolio over the past 15 years…

Berkshire Hathaway (BRK-B) — I still consider Berkshire to be an attractive buy at 1.3X book value, which if we make some assumptions about the fourth quarter would get a buy price up to about $240. I’d buy at that price, and buy more aggressively below $225, with the idea that Berkshire will outperform the market in the next crash, provide some upside optionality during a bear market because of their massive cash holdings, and will not trail the market too badly during bull markets. And try to go back and read Warren Buffett’s annual letters, all of them, they provide a little sanity for a crazy financial world… next one should come out in about two weeks.

I’ve been saying more or less the same thing about Berkshire Hathaway for a decade or more — it’s not likely to beat the market in a good year, and it’s likely to do better than the market in a bad year, as Warren Buffett gets an opportunity to add to Berkshire’s holdings with lower-cost acquisitions.

I’ve held Berkshire Hathaway for about 16 years now, and have added many times over those years but never sold, so you know my bias up front. I’ve been to a couple Berkshire Hathaway annual meetings, and I’ve drunk the Kool-Ade to some degree. I agree that Warren Buffett and Charlie Munger are among the most admirable investors of the past century, thanks more to level-headedness and patience than to brilliance, and I’m pleased to be invested with them, even as their partnership chugs through its sixth decade and Warren is now in his 90s.

But the stock is not always a screaming buy, and I’ve also overpaid for some of my shares, which is why my compound return for my Berkshire position is now only about 11% a year. Still, that’s not so bad and I expect it to continue to be a solid investment — even the shares that I paid too much for, right before the market crash in September of 2008 (I paid about 1.7X book value for those), ended up being a great investment over time. It just ...

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