Berkshire Hathaway (NYSE: BRK.A) is one of the few companies on NYSE that have outperformed the S&P 500 consistently. Since 1965, the stock’s compounded annual rate has been doubled compared to the benchmark.
The stock closed at $309,096 on February 28, which is a fall of 8.98% on a YTD basis. The stock had been in a strong uptrend over the last few years. The $500+ billion conglomerate reported a net income of $29 billion Q4 2019, and $81.4 billion for the full year.
However, operating earnings declined slightly to $24 billion. The company spent $5 billion in share repurchase.
Changing investments
The company unloaded 3.7 million shares of technology giant Apple (NASDAQ: AAPL) in Q4, bringing in around $1 billion (approx. $800 million to $1.1 billion) in cash. It diluted 1.5% of its total position in the stock. It still holds 245.2 million shares of the company.
Berkshire also bought a stake in retail company Kroger (NYSE: KR), helping its stock fly by 6% in after-hours trading. The company comes with strong management, an aggressive share buyback program, and has enjoyed a conservative valuation for some time.
The free cash from Apple sale has also helped the company buy a stake in biotech company Biogen. Most other investments follow the same pattern as in previous years.
Unaddressed issues
We still don’t know who will succeed Warren Buffett and Charlie Munger, which leaves a big gaping hole inadequate fundamental analysis of the company. Earlier this year, Buffett also met blockchain and crypto company Tron’s founder Justin Sun over lunch.
His view on Cryptocurrency remains clear:
“Cryptocurrencies basically have no value and they don’t produce anything,” he told CNBC’s Becky Quick in a “Squawk Box” interview. “In terms of value: zero.”
Overall, Berkshire is still a strong company available at a hefty price tag. The company is following its value investment strategies effectively, even though the silence on key issues like succession could be deafening. It is a worthwhile investment to add to any portfolio.
