January 20, 1999
The Buffett Buffet
Berkshire Hathaway price (1/19/99): $66,100
Few will argue that Warren Buffett is one of the greatest investors of our time. Few will argue that Buffett's Berkshire Hathaway (NYSE: BRK.A) (Berkshire also has class "B" shares with the ticker BRK.B) has invested in the highest quality companies available. Few will argue -- but we will -- we're Dueling Fools.
This week we bring you the long-awaited Berkshire bout. Dale Wettlaufer (TMF Ralegh) and Bill Barker (TMF Max) are our bull and bear. They will be arguing over what few will argue over. Who will win?
And don't miss this week's Duel Flashback, where we reboot our Compaq (NYSE: CPQ) Duel.
You Get to Vote!
Once you've read the arguments and the rebuttals, it's your time to cast your vote. We'll tabulate results each week and revisit them from time to time to see whether you were right! As always, we invite you to join us in the Dueling Fools Message board to continue the duel.
[Any suggestions, comments, praise, or flames, please send them along to the Dueling Fools Team.]
It's pretty obvious that I like Berkshire Hathaway and the value it represents right now. The Boring Portfolio, which Alex Schay and I began to co-manage on October 1 of last year, acquired six class "B" shares of the company on New Year's Eve and increased that stake by one-third two weeks later. That much is an objective fact. Rather than defend myself against what Bill can come up with, I'm going to address pervasive misperceptions that are held about this company. I hear Bill's taking a very unique tack on the company, so I don't expect him to give me the first argument against which I will defend, but let's just get into that one anyway.
First, to head off the notion that this company is a closed-end mutual fund, one has to realize first and foremost that all large insurance companies have substantial financial reserves invested in liquid securities. It's just that most insurance companies invest their reserves in debt instruments. Berkshire Hathaway has chosen to invest a substantial amount of its insurance float (premiums that have been taken in but not yet paid out for insured losses) in excellent companies such as Coca-Cola, Gillette, and Freddie Mac. This maximizes investment returns the company can achieve, since equities have handily outperformed bonds over the course of the century.
Results for last week's Texas Instruments Duel
|I can't make up my mind||
|TMF Parlay's Bull argument||
|TMF RFK's Bear argument||
|They were both excellent||
|They were both lame||