The Value Investing Approaches Of Warren Buffett, Charlie Munger, Todd Combs, And Ted Weschler At Berkshire Hathaway

|
Includes: BRK.A, BRK.B
by: David Kass

Summary

$1,000 invested in Berkshire Hathaway 52 years ago is now worth $18.5 million.  The same amount invested in the S&P 500 with dividends included would be worth $123,000.

Warren Buffett, Charlie Munger, Todd Combs, and Ted Weschler have consistently outperformed the S&P 500 over decades.

Todd Combs and Ted Weschler are largely compensated based on their outperformance of the S&P 500.

As demonstrated in the attached slides, the value investing approaches of Warren Buffett, Charlie Munger, Todd Combs and Ted Weschler have resulted in consistently outperforming the S&P 500 with dividends included over many decades. From 1965-2016, Berkshire Hathaway’s (NYSE:BRK.A) (NYSE:BRK.B) compounded annual gain in per share market value of 20.8% far exceeded the 9.7% compounded gain of the S&P 500 with dividends included.

Over the foreseeable future, Berkshire’s outperformance is very likely to continue. Todd Combs and Ted Weschler are in place and have been designated to run all of Berkshire’s investments after Warren Buffett is no longer at Berkshire. With Berkshire’s rapidly growing cash position of $109.3 billion as of September 30, 2017, substantial growth can be anticipated through the continued friendly acquisitions of companies as well as investments in equity securities.

Berkshire also is a more tax efficient investment than is the S&P 500. Since the S&P 500 pays dividends that are taxable and Berkshire does not pay dividends, Berkshire’s outperformance relative to the S&P 500 increases when calculated on an after-tax basis.

Disclosure: I am/we are long BRK.B.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

About this article:

Expand
Tagged: , , , Property & Casualty Insurance
Want to share your opinion on this article? Add a comment.
Disagree with this article? .
To report a factual error in this article, click here