What I Sold to Embrace Berkshire Hathaway

I bought some Berkshire Hathaway (BRK.A) for some accounts I watch for friends and family. They like me to keep their accounts fully invested. Here's what I sold and why:

Full Sale: Dow Jones Diamonds Trust (DIA) ($132.53)

This is the Exchange Traded Fund that holds the 30 stocks of the Dow Jones Industrial Average. With so much cash on hand and a good portfolio, Berkshire Hathaway is both as good as the Dow Jones but offers less exposure and cheaper fees.

Full Sale: Blackrock Floating Rate Income Strategies (FRB) ($18.84)
Floating Rate Income funds are all trading near NAV. I don't see the advantage anymore.

Partial Sale: Deagio (DEO) ($83.85)
Diageo is nearing full value. Its valuation means it is no longer a value stock.

Partial Sale: Tsakos Energy Navigation (TNP) ($57.15)
This shipping company is so darn cheap, but I had to take a little profits from the $35 where I bought it.

Bought: Berkshire Hathaway B- shares (BRK.B) ($3630)
Large capitalization stock is undervalued. Lots of cash. Underpaid management. I don't think I've ever referred to management of any other company as underpaid. I normally prefer the "A" shares, as they have 30 times the claim and 200 times the voting rights.

Disclosure: I own DEO, TNP and BRK.A for my personal account. I do not professionally manage money. The accounts to which I refer are not managed under any professional contract, I simply have limited trading authority and help my friends with suggestions. I am not compensated as an asset manager by anyone. I am not a professional asset manager nor do I seek to be one. Please do not contact me asking if I will manage your assets.

Comments

[Frank Li:]

DIA is an odd ETF because it isn't sufficiently diversified. And arguably, Berkshire Hathaway's acqusitions are making it almost as diversified as DIA over time.

Interesting comment on TNP. Can you tell us more about it?

2007 May 17 05:03 AM