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No. of Recommendations: 5
The rap on BRK growth prospects, at least as compared to its history, is that the enormous size engendered by its success makes it increasingly difficult to move the needle.

Really exciting growth tends to happen in smaller companies. But today even spectacular performance by a five-hundred million dollar acquisition is likely to barely budge Berkshire earnings. In the early years that would have been enormous. Now it approaches insignificance. So great decisions have far greater impact in the beginning, when the enterprise is relatively small, than they do now, when the enterprise is among the largest in the world.

Big acquisitions originate at the top, and that seem likely to continue as long as WEB — the greatest investor of all time — is at the helm.

Todd and Ted appear to be an attempt to mitigate the size encumbrance by multiplying the prospect of gains from smaller investments. I believe the initial 3% stake in PCP was acquired by T/T. Leave it to WEB to mine synergy from this.

PCP brings a talented acquirer on board in a position of significant influence. If PCP, a tenth the size of BRK, continues to sensibly agglomerate in its rapidly growing niche, then BRK is assured dominance in that significant sphere of economic activity.

It's no accident that recently acquired Heinz has rapidly added the most popular mustard to its dominant ketchup in merging with Kraft.

So the way forward with comparable gains may be through acquisition delegation, both to investing geniuses like T/T and to operating entities like PCP, as well as to outside investment partners like 3G. It's long been known that Berkshire companies are encouraged to seek opportunities for organic growth within their sectors, resting assured there's ample financing available for any qualified opportunities.

All this suggests to me that highly decentralized diversification, implemented within a lifetime of sensible acquisitions, may be the key to perpetuating extraordinarily rapid growth.

What are your thoughts on this?

Tom
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