Well-known investor dumps Berkshire Hathaway

Doug Kass says the company's portfolio is so massive that it will have to make larger deals just to move the needle.

By Kim Peterson Nov 15, 2011 4:10PM
Famed investor Doug Kass has decided to close his position in Berkshire Hathaway (BRK.A), suggesting that the stock's glory days are gone.

Take Monday's announcement by Warren Buffett that Berkshire had invested $10 billion in IBM (IBM), Kass wrote in a note. Berkshire's portfolio is so huge that it will have to make larger deals just to move the needle. He thinks the IBM deal shows that "more ordinary and plain vanilla" investments will be the core of Berkshire's portfolio strategy in the future.

"Berkshire's past growth and successes are one of its greatest enemies to future growth," Kass wrote. "Ever-larger investments/acquisitions are required to produce an impact and provide differentiated returns for shareholders."

And while Kass doesn't directly address Buffett's age or inevitable retirement, the change of leadership at Berkshire is clearly on his mind. Buffett has hired two investing gurus, Todd Combs and Ted Weschler, to help direct Berkshire's portfolio. Kass doesn't think they'll do as well as Buffett.

"They are mere mortals, and with the benefit of hindsight and history, Buffett was a true investing immortal!" Kass writes. "What is almost certain is that Buffett’s old black magic will not be easily duplicated by his appointees."

Kass' observations boil down to this: The bigger a company gets, the harder it is to grow. That certainly applies to investing portfolios as well.

He said he would buy Berkshire's class A shares at around $100,000 a share, but for now he sees better opportunities elsewhere. Berkshire shares traded Tuesday up slightly to $114,615.

Kass founded Seabreeze Partners Management, and started his investing career in 1972, according to his CNBC profile. He is a frequent investing commentator online and on television.

4Comments
Nov 15, 2011 5:06PM
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Buffet also had the baby boomers powering his portfolio the past 50 years. Now the baby boomers will create a huge sucking sound as they pull trillions of dollars OUT of the market during the next 20 years. Its lights out for The Wall Street Casino.
Nov 16, 2011 11:27AM
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ANTIKOOLAID,  what's the matter, did your OWS tent get smashed yesterday?
Nov 17, 2011 2:18PM
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[ Begging for helps ] Complaint about Human Rights Violations by IBM China on Centennial 

Please Google:

IBM detained mother of ex-employee on the day of centennial
       or
How Much IBM Can Get Away with is the Responsibility of the Media 
       or
Tragedy of Labor Rights Repression in IBM China
Nov 16, 2011 4:57AM
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This is going to be a problem with every company and the fat pigs and greedy thieves will soon figure it out.  You can only make your profit chart go up so far with drastic measures (massive layoffs, etc..) because eventually, you will run out of people to layoff or you will have shipped all of your jobs overseas... and then how will you improve the bottom line for the fat PIGS at Wall Street who OWN this country.

 

Then your stock goes DOWN DOWN DOWN into the toilet, right where those fat greedy PIGS belong.

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