Berkshire shareholder sells ownership and accuses Buffett of & # 39; vacuum cleaner & # 39;
Berkshire Hathaway Chairman Warren Buffett walks through the exhibit hall as shareholders gather to hear from the billionaire investor at Berkshire Hathaway Inc's annual shareholder meeting in Omaha, Nebraska, U.S. May 4, 2019.
Scott Morgan | Reuters
David Rolfe, longtime Berkshire Hathaway shareholder and chief investment officer at Wedgewood Partners, is bored by Warren Buffett.
Rolfe told clients in a letter that he sold the company's stake in Berkshire after decades of being shareholders, and his frustration over the conglomerate's huge cash collection, easy investments and what he believes are missed investment opportunities by Oracle of Omaha and his team over the course of the current beef market.
Berkshire Hathaway shares have stored the S&P 500 during the current bull race, which began in March 2009. At that time, Berkshire's A stock is up 323% while the broad index has risen 334%.
"Thumbs did not cut Heinz mustard during the Great Bull Market," Rolfe wrote in a third quarter letter to clients. "The Great Bull could have been one hell of an amazing career for men. Buffett and [Vice Chairman Charlie] Munger."
Not that Buffett will miss Rolfe much, the RiverPark / Wedgewood Fund owned 48,000 shares of Berkshire B-class shares, worth about $ 1[ads1]0 million. And Rolfe's performance through the bull market has not been the best either. His fund's annual return, net of fees, is 13.6% over the past 10 years through the second quarter, according to a fact sheet found on Wedgewood Partners website. At that time, the S&P 500 had an annual return of 14.7%.
Berkshire's cash pile swelled to more than $ 120 billion by the end of Q2 2019, a record for the company. In his annual letter to shareholders, Buffet said he wanted to make an "elephant-size purchase", but noted that prices were "sky high." Rolfe believes that so much cash is a "significant obstacle to growth" for the company.
Rolfe was also frustrated by some of Berkshire's investments in the current beef market. He highlighted IBM and Kraft Heinz, among others.
Buffett revealed IBM's $ 10.7 billion stake in the fourth quarter of 2011. But by the beginning of 2018, he had sold his entire stake. At that time, IBM shares fell by more than 20%.
Kraft Heinz is another investment that has not pledged to Berkshire, especially since 2018. The stock has lost about two-thirds of its value at that time. [19659002] These traits "do not inspire confidence that Buffett & Co. is still at the top of their game," Rolfe said.
Buffett and Munger are 89 years and 95 years respectively, and questions about who will succeed with them have percolated for many years now. At the company's annual shareholder meeting, Buffett said that long-time executives Greg Abel and Ajit Jain could one day join him and Munger on stage to answer questions, hinting at Abel and Jain's potential for success.
Rolfe also noted Berkshire missed two major opportunities at the start of the bull market by not investing heavily in credit card companies Mastercard and Visa. During the beef market, Mastercard has increased more than 1,800% while Visa is up over 1,300%. Berkshire holds shares in both companies, but they make up a small portion of the company's equity portfolio.
"These two stocks should have been setup for Buffett," Rolfe said.
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