One question that come to my mind very often is about the future of BRK.
The two gentlemen, Charlie and Warren, are in perfect shape, but their ID say that they were born some (many) years ago.
So... Who's gonna run BRK's businesses "after that day" in the future?
LESSON: You told us (as investors/beginners), they told us, everybody told us, ... that "management / leadership (like Warren&Charlie) is crucial" for the success of a company.
That "skin in the game" is also a factor to take into high consideration.
"Think like a owner", and so on.
So, how do you see the future of BRK without them? Or, who do you see at the command post?
Could you please explain „The main problem Berkshire has is it's size. This reduces their investable universe enormously and will hurt their future performance the most.
Yes. Thinking better, you are right. Probably like you I’ve (wrongly?) supposed that BRK big size and enourmous amount of cash available now& in the future, could be a clear strategic and economic advantage. Obviously if used in the proper way.
Berkshire's market cap is equal to roughly $700 billion.
This means that when want to take a position of 10%, the stake would be worth $70 billion.
As a result, Buffett just isn't able to invest in companies with a smaller market cap. Buffett stated that when he would just manage a couple of millions, he would probably be able to make > 30% return per year in smaller companies.
"Anyone who says that size does not hurt investment performance is selling." - Warren Buffett
Thanks for the valuable infos!
One question that come to my mind very often is about the future of BRK.
The two gentlemen, Charlie and Warren, are in perfect shape, but their ID say that they were born some (many) years ago.
So... Who's gonna run BRK's businesses "after that day" in the future?
LESSON: You told us (as investors/beginners), they told us, everybody told us, ... that "management / leadership (like Warren&Charlie) is crucial" for the success of a company.
That "skin in the game" is also a factor to take into high consideration.
"Think like a owner", and so on.
So, how do you see the future of BRK without them? Or, who do you see at the command post?
Warren and Charlie talked about this multiple times in their annual shareholder letters and on the AGM.
Charlie's and Warren's main task is capital allocation and the future is assured as Greg Abel will take over when Warren (and/or Charlie) pass away.
The main problem Berkshire has is it's size. This reduces their investable universe enormously and will hurt their future performance the most.
Love your work! Thanks a lot.
Could you please explain „The main problem Berkshire has is it's size. This reduces their investable universe enormously and will hurt their future performance the most.
Best regards
Yes. Thinking better, you are right. Probably like you I’ve (wrongly?) supposed that BRK big size and enourmous amount of cash available now& in the future, could be a clear strategic and economic advantage. Obviously if used in the proper way.
Why this can be a risk?
Berkshire's market cap is equal to roughly $700 billion.
This means that when want to take a position of 10%, the stake would be worth $70 billion.
As a result, Buffett just isn't able to invest in companies with a smaller market cap. Buffett stated that when he would just manage a couple of millions, he would probably be able to make > 30% return per year in smaller companies.
"Anyone who says that size does not hurt investment performance is selling." - Warren Buffett
Thanks for the kind reply.
Very informative. Always encourage value investing. Thanks for sharing 🙏
It's an honor! Next week I'll publish a summary of the annual shareholder meeting of Berkshire Hathaway.
Extremely informative. Loved it.
Really looking forward to the AGM on Saturday. Will keep you posted!
Thank you, Sir!
This will keep me busy during my voyage!
See you soon!
Have a nice flight, Pavel!
Great summary article and what an incredible line up of investment folks you’re meeting in Omaha 🤩
Glad you liked it! Really enjoying my time in Omaha. You should come one day too!
It’s definitely on my bucket list! 😄
Hope you had a great time at the Berkshire Hathaway annual meeting. Hope to meet you there next year.
It would be an honor, Nas!
I had a blast. I'll drop a free course with everything I've learned on Thursday.
Very good piece. We enjoyed it, CQ. Thanks!
I am having a blast in Omaha. You should definitively join one day too.
Thanks for this post, I really enjoyed it!
It's an honnor, Hannah! Next Thursday we'll provide you with a summary of the weekend.