Shorting Berkshire Isn't Smart

Most regular readers of this column know that I'm a value investor. I use quotation marks because I feel "value" is an inherent part of any investment approach, but if you want to use labels, go for it. Readers also know that I'm a big Warren Buffett fan. That being said, my stance against shorting Berkshire Hathaway (BRK.A, BRK.B) has nothing to do with my respect and admiration for Buffett. It has everything to do with the fact that Berkshire is in as good shape as it has ever been.

I won't deny the oversized Buffett effect. There's no denying that Goldman Sachs (GS) agreed to pay Berkshire 10% on $5 billion in preferred stock and give it warrants to buy $5 billion worth of stock at $113 a share because of Buffett. Two-and-a-half years later, Goldman redeemed the preferreds for $5.5 billion in addition to the $1.25 billion or so Berkshire received in interest. Bank of America (BAC) on paper has been an even more lucrative investment for Buffett and Berkshire....313 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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