For Now, Little Will Change at Berkshire
We are all shocked and concerned about Warren Buffett's diagnosis of prostate cancer. But, for investors in Berkshire Hathaway (BRK.A), does it matter? On a personal level, he is fortunate to have caught it early at a treatable stage, and odds are he will live for a few years more. For shareholders, this is a shot across the bow -- the first test to see if they really believe that Berkshire is a fortress conglomerate that will continue to grow profitably and spin off cash for years after Warren is gone. With the stock down 1% in after-hours trading, I would not say they failed the test, but what else can we expect? The stock is not going to rally on this news.
Berkshire is an attractive portfolio, although some of the attractiveness is due to shrewd purchase prices. Even Warren admits to his hoarding instinct, and he rarely sells a business, even after it is proven to be lousy. For instance, would he ever sell BusinessWire? That service is basically a glorified email list, and it will continue to get disintermediated by the Internet. Anyone can enter the business and compile interest lists, and charge a lot less than BusinessWire does. I see this one going the way of newspapers and World Book Encyclopedia. (Take note: I submitted this question for the annual meeting, so perhaps it will get asked and Warren will address the issue.)...307 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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