tvb

Money Managers and the Berkshire Hurdle

Hedge fund fees are, indeed, ridiculously high, but there's one flaw in your argument with respect to Berkshire: You don't take into account Berkshire's massive size relative to most, if not all, hedge funds. If Warren Buffet was running a small to medium-sized fund it would be different. However, the Berkshire entity has grown so massive, that they need to invest multiple billions in any one investment idea, just to make a dent in performance returns. I think anyone would agree that this creates prohibitive scale/liquidity/techni... issues for most potential investment ideas and reduces profit potential. Also, on what basis do you suggest that Berkshire's stock is not overly or fairly valued? Buffet's investment acumen is certainly no secret, so shouldn't his skills be already priced onto the stock? Berkshire is an extremely difficult stock to value, not least because it's hard to determine how you discount Buffet's advanced age when considering longer-term future performance. Berkshire is a great company, but as it's said: "a great company is not necessarily a great investment, but it's a good place to start looking". Disclosure: I am, in fact, long Berkshire.