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Which is better, buy BRK or the stock holdings of BRK


jasonw1
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Both BRK and the stocks it holds are down significantly, if you have $ to invest, will you buy BRK or a basket of its common holdings? Which would offer better opportunity and returns? Same question for FFH.

 

There are obvious reasons to buy BRK which put you in great hands and ride, there is also insurance float giving you extra couple of points in return. At the same time the holdings of BRK has gone down significantly and you can be nimble and buy great companies at bargain prices, much lower than Buffett and Watsa paid.

 

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In the last 2 year annual reports, Buffet has shown how the growth of the private businesses has outstripped that of the public investments. Operating earnings from wholly owned private businesses bought by Berkshire have compounded at over 20% over the last decade while public equities have done a more modest 13% or so. That should suggest that the cash is being allocated to the private business and so buying Berkshire is probably the better deal. Likewise, Buffet needs only a 10-11% return on public equities to generate a 16% threshold using the float.

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A simple suggestion.

 

Calculate your expected return for each of the investments under consideration.  You should be buying those which have the highest expected return.  Perhaps buy a basket of the top 5-10 names to give you some diversification (especially if there are some financials in that list)

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