• Home
  • About
  • Team
  • Contacts
  • Blog

Berkshire Hathaway Performance

  1. Home
  2. Blog
  3. Berkshire Hathaway P ...

Portfolio manager’s Letter July 2010

Berkshire Hathaway performance has out-performed the S&P 500

Berkshire Hathaway performance this year has out-performed the S&P 500 this year by about 27%, so Losch Management Company’s portfolios, which had been heavily dependant on Berkshire Hathaway performance, have been doing well compared to the overall stock market. Most of Berkshire Hathaway performance was the result of the 50 for one split of its “B” shares and its inclusion in the S&P 500 Average. Last month’s announcement that Berkshire Hathaway would also be included in the Russell 3000 and 1000 averages has been responsible for the stock’s recent rally.

Because the recent rally is not based only on earnings improvement, and that the hurricane season has not generally been a strong period for the stock, this rally will likely be temporary. We reduced our overweight position in Berkshire Hathaway for two reasons. First, the recent correction in the overall stock market has left us with a lot of good quality stocks that are currently selling at attractive prices. Second, the prospect of a bad hurricane season and a lot of petroleum sloshing around in the Gulf of Mexico may provide us with an interesting indicator for Berkshire Hathaway performance.

Berkshire Hathaway Performance

Goldman Sachs

Is Goldman Sachs a fat pitch? At six times the last twelve months’ earnings and 1.6 times book, it certainly appears cheap. The question is this: do 2009’s earnings have anything to tell us about the company’s future, and its impact on Berkshire Hathaway performance?

Michael Lewis, in his book “The Big Short”, says Wall Street is over. While this may be an overstatement, I agree that Wall Street will never be the same (hopefully). Will Goldman Sachs return to the glory of its recent past, or has its business model been blown, and what will be the impact on Berkshire Hathaway Performance?

If commercial banks are forced to give up their trading book, their derivative trading, and their private equity business, this will hurt Goldman Sachs. However, the company’s main business has traditionally been in underwriting and in mergers and acquisitions. These are areas where Goldman Sachs may well be better off in the future because their own greed has eaten a lot of their competition.

Investors are worried about the impact of regulation, but I think the bigger question for Goldman Sachs is what lessons will be taken from the company’s near death experience. The old proverb that should apply is “that which does not kill us will make us stronger”. There is, of course, no guarantee that Goldman Sachs will learn from this market turbulence, but no one has ever accused them of being stupid.

If Goldman Sachs can learn from their mistakes and bad behavior, concentrate on their core franchise of underwriting merger business, they will still have a name that is the best in the industry. They will have a positive effect on Berkshire Hathaway Performance. If they do this, they can be a better company in the future without the derivative business, with its conflicts of interest and excess leverage.

There was a lot of stuff going on at Goldman Sachs and at their Wall Street cronies that our economy really does not need. It is a fairly easy guess that Congress will do some things that are likely to damage Goldman Sachs’s bottom line in the short term, and it will be interesting to see how Goldman Sachs reacts.

Lewis thinks that Goldman Sachs should be broken up and that its’ high-risk businesses sold to hedge funds. He believes that compensation plans for traders need to reflect the risks the traders are taking. This leads him to the conclusion that high-risk trades belong in a partnership because then the people taking the risk have all of their skin in the game. I do not know if this is realistic, but I have to admit it sounds like a good idea, and might influence Berkshire Hathaway Performance.

It would be similar to Buffett’s idea that CEO’s of busted banks should end up broke. But, Lewis has a more elegant solution because, with his way, all of the big players, not just the CEOs, would end up broke; this has to be a better result than today where just the shareholders ending up broke.

07/01/2010



Leave a Reply Cancel Reply

Your email address will not be published.


Comment


Name

Email

Url


Blog Archive

2020

  • The Stock Market

2019

  • Behavioral Investing

2018

  • Trumped
  • Warren Buffett vs Wall Street
  • Globalism, 1982-2000 Bull Market

2017

  • Volatility Underlying Calm Market
  • What’s new with CB&I?
  • Passive Investing
  • Economic Cycles
  • Current Stock Market 2017 Comment

2016

  • Global Plastics Summit Highlights
  • Value Investing vs Index Investing
  • How to Play an Index Bubble
  • Successful Investors
  • Is the Market Overvalued?
  • Operating Earnings
  • Article by investment manager in Bay Hill Living
  • Building Foundation

2015

  • 3G Culture – Dream Big
  • Myopic Loss Aversion
  • CBI Nuclear Energy
  • St Joe Company
  • What’s in a Word? Plastics.
  • Are Bonds Safer Than Stocks?

2014

  • Chicago Bridge and Iron
  • CAMEX 2014
  • Global Economy October 2014
  • Fluor Corporation
  • Interesting Quotes from Daily Journal Annual Meeting
  • The Daily Journal Annual Meeting
  • Albemarle Corporation
  • Triumph Group
  • The American Energy Revolution
  • Singapore

2013

  • St Joe Company Update
  • Hedge Fund Managers
  • Triumph Group Inc.
  • Bitter Brew
  • An Antifragile Portfolio

2012

  • Leucadia National Corporation
  • This Time it is Different
  • Successful traders psychology
  • St Joe Company
  • Learning from Pain

2011

  • Long Cycles – Part II
  • Long Cycle
  • Nasty Month for Market
  • Make a Buck with Fortescue Metals Group
  • Berkshire Hathaway Look Through Earnings
  • St Joe Company Inc
  • Successful Investment Management
  • A Look Into Latin American Market
  • The Mother of all Quarters
  • 2010 Investment year results

2010

  • Fault Lines
  • US Market 2010
  • Berkshire Hathaway Third Quarter 2010
  • The Stock Market 2010
  • Berkshire Hathaway Second Quarter 2010
  • Berkshire Hathaway Performance
  • Long Term Greedy
  • Goldman Sachs
  • Berkadia and Leucadia
  • USG corporation
  • Berkshire Hathaway 2009 2010
  • Why Capitalism Works

2009

  • The Lords of Finance
  • The $44 Billion Dollar Train Set
  • Berkshire Hathaway 3rd Quarter 2009
  • Career Risk for Investment Manager
  • Berkshire Hathaway financial statements
  • Berkshire Hathaway Preferred Stock
  • Moral Hazard
  • Credit Default Swap
  • The Shadow Banking System
  • Learning Things the Hard Way
  • Our C-System
  • 2008 Investment results

2008

  • Investment Risk
  • Bear Markets
  • Generational Events
  • Orange sheets – Money is doing better
  • Inflation Not The Problem
  • Tipping Point
  • Long Term Capital Management
  • Financial Insurance
  • Western Refining Inc
  • Berkshire Hathaway Year To Date
  • Berkshire Hathaway Cash Flow
  • 2007 investment results

2007

  • Investment results 4th Quarter 2007
  • Greenspan on Inflation
  • Berkshire Hathaway Third Quarter 2007
  • Berkshire Hathaway Operating income 2007
  • Berkshire Hathaway Hedge Fund
  • Leveraged Buyouts
  • Stability Unstable
  • Weak Dollar
  • Berkshire Hathaway Chairman’s Letter
  • Steel Dynamics
  • Breakwater Resources
  • 2006 Investment year results

2006

  • New Investment Stocks
  • Equitas
  • Berkshire Hathaway Third Quarter 2006
  • Hurricane Synergy
  • Berkshire Hathaway Second Quarter 2006
  • Fat Pitch
  • Perfectly Obvious
  • Berkshire Hathaway Growth Rate
  • Berkshire Hathaway First Quarter 2006
  • Berkshire Hathaway Annual Report 2006
  • Inflation Is
  • 2005 Investment year results

2005

  • Exogenous Events
  • The Easy Money
  • Look-Through Earnings
  • High-Risk Mortgages
  • Unintended Consequences
  • Rydex Ursa Fund
  • Warren Buffett Premium
  • Private Equity
  • Latticework Mental Models
  • Buffett’s Lackluster Performance
  • 2004 Investment year results
  • Professor Smith’s Second Bubble

2004

  • Hedging Currency Disaster
  • Risk Assessment
  • Too Many Bears
  • The Chinese Century?
  • Patterned Irrationality
  • Timber
  • Costco’s Cash
  • Physics Envy by Charlie Munger
  • Asset Allocation Berkshire Hathaway
  • The Balance of Payments
  • 2003 Investment year results

2003

  • Hedge Funds
  • The trade deficit is not debt
  • Secular Bear Market
  • Which Index Funds?
  • A Different Drummer
  • Costco’s Float
  • The Power of Float
  • Berkshire Hathaway Annual Meeting 2003
  • Psychology of Human Misjudgment
  • Sitting on the Sidelines
  • Berkshire Hathaway intrinsic value
  • 2002 Investment year results

2002

  • Insurance company Moats
  • Bond Bubble
  • Berkshire Hathaway Cash Flow 2002
  • Behavioral Economics
  • The Bear Market 2002
  • Greenspan Put
  • Second Quarter Cash Flow at Berkshire Hathaway
  • Berkshire Hathaway Annual Meeting 2002
  • Red Wire – Green Wire
  • Stupid FED Tricks
  • The Bottom Line
  • 2001 Investment year results

2001

  • Don’t Fight the FED
  • Buy and Hold? – It all Depends
  • Ben Laden and Berkshire Hathaway
  • The Dinosaurs Dance
  • Costco Moat
  • Bubble Watching
  • Sit on your Ass investing
  • Berkshire Hathaway Annual Meeting 2001
  • Carnival Cruise Lines
  • 450000 Square Ft Furniture Store
  • Lunch Money Indicators – Annual report
  • Other People’s Money

2000

  • Bear Tracks
  • Build It and Money Will Come
  • Efficient Stock Market
  • Style Drift
  • Lunch Money Indicators – Options
  • Identifying Problems
  • Small Retail Stocks
  • Charlie Munger comments
  • Big Al and the Bubble Machine
  • Berkshire Hathaway Cheap
  • Index Funds
  • 16 rules for investment success
Make an appointment or contact us by phone: +1 (689) 246 49 49
© 1999 - 2022 Losch Management Company
Support by Global AGM