76: Another Reason To Love Owing Berkshire Hathaway; Venturing Beyond Your Circle Of Competence
Sit on your @$$ investing.
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Another reason to love owing Berkshire
I’m a big fan of Berkshire and a part owner of the company — but you knew that already. With Class B shares trading at $275 — an implied market cap of $600 billion — shares are clearly undervalued.
But so is a lot else.
It’s at times like these that you can get tempted to stray beyond your circle of competence. The oil and gas and the housing industries are two of those areas for me recently. You can just feel the hatred/dislike and the uncertainty. Those are siren calls for value investors to search for bargains. If the industries are outside of your circle of competence, or even just on the edge of it, you might be tempted to stray.
Enter BRK. They do the work for you. You can, to use Munger’s famous phrase, “sit on your ass” and do nothing while the folks at HQ in Omaha do the work for you. Berkshire has been buying as much of Occidental Petroleum stock as it can get its hands on. Loads of Chevron too. And that’s on top of the pipeline assets already owned by BRK Energy.
Berkshire also owns the best homebuilder in America, Clayton Homes.
With this in mind, I don’t need to worry that I’m missing something. It’s easier to sit on my ass and do nothing if I want. Or participate by reading what I can about what BRK is doing and trying to understand their rationale.
It’s in this way that BRK is like a guide, helping you venture beyond your circle of competence. Find out why they bought it.
If you own BRK you own OXY and CVX too. Calculate your proportionate ownership of each to help it seem more real. For example, if you own 100 shares of BRK you have a $1,000 investment in CVX and about a $470 investment in OXY. This ownership is exactly the same as if BRK owned none and you had a similar investment of your own.
It’s a great time to be a value investor.
Stay rational! —Adam
Great point, couldn’t agree more!