Berkshire’s annual letter 2020 – 2 observations
February 22, 2020
It’s always fun to spend part of a Sat afternoon reading Mr. Buffett’s annual letter, full of sage advice and wit. This year is no different.
The annual letter is here, I won’t summarize it as plenty of smarter observers do better job. Also it’s a fun, easy read at 14 pages.
I will share two points, and would be grateful for readers’ comments.
First, Berkshire now holds a whopping $128 billion in cash, having not closes a major acquisition in 2019. The crash Mr. Buffet has been expecting is yet to materialize. Berkshire stock has underperformed market in recent years.
Has he lost his Midas touch? I do not think so. He’s a patient man and he’s betting that the crash must come, if not this year, then then next, and he’s ready for it, with that monster cash.
Second, this is an interesting chart for me, the top 15 stock investments held by Berkshire:
A whopping 9 of 15 stocks (60%) or 41% of market share are financials. With exception of JP Morgan, Berkshire owns high single or low double digits of the US (and the world’s) largest banks and financial institutions, sometimes the biggest single shareholder. These financials have been great investments, but I wonder if Mr. Buffett also views them as strategic. When Dooms Day comes, will he leverage these assets to aggressively hunt for, execute and finance the elephant deals Berkshire so hungrily seeks?
It looks to be no one else is so well-positioned to benefit tremendously from the coming Armageddon.
What do you think?