Chasing Value: Berkshire - you're selling, I'm buying!

Posted Oct 28th 2008 2:10PM by Sheldon Liber
Filed under: Rants and Raves, General Electric (GE), Berkshire Hathaway (BRK.A), Goldman Sachs Group (GS), Chasing Value™, Best Stocks for 2008

It was only seven weeks ago that I posted Chasing Value: Considering Berkshire Hathaway... again. At the time, Berkshire Hathaway (NYSE: BRK.B) was trading around $3,850 for the "B" shares.

Well, I think the time for consideration is over and this morning I placed a limit order for the stock. I think the time is right when stories like Berkshire Hathaway at Lowest Close Since Feb. 2007 and my colleague Peter Cohan's Warren Buffett is not perfect are being trumpeted in the media.

For those who have followed "my pal Warren" Buffett for years, or even decades, these cautionary stories of him losing his edge are as silly as trying to predict where the DJIA will be on a given date. As for Peter suggesting that he was early buying into Goldman Sachs Group (NYSE: GS) or General Electric (NYSE: GE) three weeks ago, well my gosh, it has only been three weeks!

I understand that the prevailing wisdom seems to be running against the buy and hold approach. But three weeks is kind of short to be passing judgment, don't you think? The DJIA is down 42% while Berkshire is only down 31% from its high of $5059.

Perhaps investors have punished the stock because GS and GE are down. Maybe it is because Berkshire has been buying up railroads and that strategy is less important with oil prices falling 55% since the summer high of $147 a barrel. It could also be because people have lost their minds -- who knows?

It is impossible to know for sure. I just think in these uncertain times Berkshire is more stable than most and run by a group of people who are second to none in business and management experience. The company has huge cash-flow and huge cash reserves, and both are highly desirable in times of high risk and weak liquidity.

There have been all kinds of suggestions from skeptics that Buffett is talking up the market, motivated by his need to prop up his portfolio in some fashion; or that just because he can think long term, others do not have the same horizon. Yeah, yeah, yeah -- heard it all before. As Peter stated, "Warren Buffett is not perfect" and I would agree. It's just that he is better than most everyone else.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I currently own shares of BRK.B and today's order would add to the position acquired years ago.