1 - Due to GAAP rules, the company's financial records go up and down a lot (due to having to book mark to mark each quarter on marketable securities). This makes the company look poor in many screeners and algorithms. Unless investors have explicitly adjusted for operating income only, this might be an issue.
2 - If again investors are looking at operating income only and comparing it to total market-cap, the stock appears to be at 22x valuation, which may be a factor.
However, sophisticated investors are likely to look past these two rookie optics issues. Beyond that I feel:
3 - Berkshire is an unsexy business and investors like tech, AI etc. There is no meme-ness to it and almost very little options exposure. Without much options, it doesn't show up in structured products and such. All this dampens overall demand.
4 - In a bull market, investors may think holding so much cash is a drag on future performance. In fact, the unavailability of possible acquisition opportunities significantly limits what can be done with the cash and I think that's been a bigger and bigger problem. Investors are wary of what Berkshire will do when forced to deal with it.
5 - While GEICO has started recovering, it is considered to be inferior compared to Progressive over the past few years.
6 - BNSF and the utilities consume a lot of capital and while Berkshire has the capital to put in, the ROCE may not be great for many of those businesses.
And I am sure there are other reasons too- these are just a collection of thoughts.
No doubt that Berkshire is good business to invest and you did well at the the time you did. Today would u say it’s too little too late for someone wanting to invest ??? I mean the best years for Berkshire have passed …. Or yet come ??
Compared to Berkshire actually golden years, the last few years have been rather tepid and that's when I have been accumulating my position. While it has been positive, but my returns on Berkshire haven't been spectacular yet, but nice and steady.
This is not financial advice - but my rationale for owning (and continue to accumulate Berkshire) is laid down at the beginning of this post. In any case, you do you. :)
Many people in my network wouldn't touch Bekrshire with a long pole - for reasons outlined in my first comment and that's fine - they have perfectly good alternative use of their money.
Why is the market valuing the operating businesses even lower?? Good time to buy I guess..
There is a combination of reasons I think:
1 - Due to GAAP rules, the company's financial records go up and down a lot (due to having to book mark to mark each quarter on marketable securities). This makes the company look poor in many screeners and algorithms. Unless investors have explicitly adjusted for operating income only, this might be an issue.
2 - If again investors are looking at operating income only and comparing it to total market-cap, the stock appears to be at 22x valuation, which may be a factor.
However, sophisticated investors are likely to look past these two rookie optics issues. Beyond that I feel:
3 - Berkshire is an unsexy business and investors like tech, AI etc. There is no meme-ness to it and almost very little options exposure. Without much options, it doesn't show up in structured products and such. All this dampens overall demand.
4 - In a bull market, investors may think holding so much cash is a drag on future performance. In fact, the unavailability of possible acquisition opportunities significantly limits what can be done with the cash and I think that's been a bigger and bigger problem. Investors are wary of what Berkshire will do when forced to deal with it.
5 - While GEICO has started recovering, it is considered to be inferior compared to Progressive over the past few years.
6 - BNSF and the utilities consume a lot of capital and while Berkshire has the capital to put in, the ROCE may not be great for many of those businesses.
And I am sure there are other reasons too- these are just a collection of thoughts.
No doubt that Berkshire is good business to invest and you did well at the the time you did. Today would u say it’s too little too late for someone wanting to invest ??? I mean the best years for Berkshire have passed …. Or yet come ??
Compared to Berkshire actually golden years, the last few years have been rather tepid and that's when I have been accumulating my position. While it has been positive, but my returns on Berkshire haven't been spectacular yet, but nice and steady.
This is not financial advice - but my rationale for owning (and continue to accumulate Berkshire) is laid down at the beginning of this post. In any case, you do you. :)
Many people in my network wouldn't touch Bekrshire with a long pole - for reasons outlined in my first comment and that's fine - they have perfectly good alternative use of their money.