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No. of Recommendations: 3
Speaking of change and predictability...

With low current interest rates and a strong case for rates remaining low for a long time a case can be made for high equity prices.

At Berkshire’s current price the market view is a mixture of:

1. These guys can’t be trusted to allocate future capital flowing in to HQ. Too conservative. Missed tech disruption both on benefiting from it and suffering from the damage to existing businesses and investments. Have made some poor capital allocation decisions. Firm is too big. Capital allocators too old. Etc.

2. The current businesses and investments don’t have sustainable competitive advantages.

3. The current businesses don’t have room to grow much.

4. The firm is too messy to understand and value. Owner earnings adjustments, underwriting volatility adjustments, unrealised investment gain/loss adjustments etc is too confusing.

5. The businesses and investments are boring. The world is changing rapidly and there are so many other stocks operating in exciting industries that are growing rapidly and have wondered economics.

I presume the above is why the market values Berkshire at about 10 times earnings.

A buyer or holder of Berkshire today does not really buy into these views. There is the question of paying 100x for some other great business with excellent growth prospects for on thing.

My question to you is this. Tell me about Berkshire’s top 5 or 10 businesses or investments by size and about their sustainable competitive advantages, their sustainability and their growth potential. The current climate may have forced people to question Berkshire and Buffett. Surely the future is a lot brighter for Berkshire that some might think. Much has been written and said about this great place Berkshire Hathaway it can’t all have been hot air?

Have a great weekend and thanks for any comments on Berkshire. Good or bad.
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