Berkshire Hathaway May Not Come Back

"It is up 10% this year, while the broader market is up 14%. That is not characteristic of the stock. In the past five years, it has risen 121%. The market is 89% higher in that time. The stock may not come back because Warren Buffett will not be either. He departs at the end of the year. Greg Abel, who has been the head of Berkshire Hathaway Energy, will replace him as CEO. But Abel is not a stock picker."

"The portfolio currently holds American Express, Bank of America, Coca-Cola, Kroger, Mastercard, and Occidental Petroleum. Buffett also has cut remarkably smart deals, like the one with Goldman Sachs during the financial crisis in September 2008. He bought shares for a total of $5 billion, which gave the market confidence when financial company stocks were nosediving. He got a 10% dividend, as well as an additional payout of $3.7 billion on a preferred dividend he received as part of the investment process. It was pure genius."

Berkshire Hathaway stock has risen 10% this year versus the market’s 14% and has gained 121% over five years compared with the market’s 89% rise. Warren Buffett will depart at the end of the year and Greg Abel will become CEO; Abel has led Berkshire Hathaway Energy and is not known as a stock picker. Berkshire’s value derives largely from its portfolio of public companies, including American Express, Bank of America, Coca-Cola, Kroger, Mastercard, and Occidental Petroleum. Buffett executed pivotal deals such as the $5 billion Goldman Sachs purchase in September 2008 that yielded a 10% dividend and a $3.7 billion preferred payout. A single major mistake by Abel could impede the stock’s recovery for years.

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