CaptainJJack

Berkshire Hathaway's (Warren Buffett) Portfolio Update: Q4 2008

As someone who owns BRK, my biggest concern had been that BRK's ROE was falling, and it was getting to a level, at around 12%, that as an investment, even Warren Buffet would not want to own it.

The problem had been the enormous cash balance; often it was $50 billion or more, and it was earning much less than 5%, after tax. Worse businesses in BRK tend to generate a lot of cash -- so the problem seemed to be getting worse.

Even though BRK has not performed well, recently, I believe that the moves he is making well set up BRK VERY well in the future.

As for the sales of PG and JNJ, it would not surprise me to find out later, he looked at his ability to get such great deals in the bond/preferred space caused him to lighten up on stocks -- especially stocks that have similar risk characteristics to his new bonds; that is, lower downside risk but lower upside.

Of course, I am speculating like everyone else, but I see NOTHING in these latest moves to cause me to think, like Kass Berkowiz (sp?) and Cramer, that Buffet is losing his touch.

Finally, I have to believe that a company with a balance sheet like BRK is a great stock to own over the next few years, especially if things do not improve soon, as I fear.