Some who saw the title of this article may be curious why I would consider Stock Advisor and Inside Value selection Berkshire Hathaway
Still skeptical? You can just turn to Berkshire's most recent 10-K filing with the SEC, where the company discloses in the first paragraph that "the most important of [its businesses] are insurance businesses conducted on both a primary basis and a reinsurance basis."
Like other major insurers and reinsurers on the property and casualty side, Berkshire took some lumps from KRW, also known as hurricanes Katrina, Rita, and Wilma. The company has a fantastic record of conservative underwriting, though, and this played well for it in 2005. As most investors know, Berkshire also has a not-so-secret weapon that goes by the name of Warren Buffett, which gives the company a major edge over most other operations out there.
Don't let my name fool you, I wouldn't recommend this company just because of who or what it is.
In short, the stock has stagnated for years, yet the business has continued to grow, to harness quality earnings, and to continue to strengthen its citadel of a balance sheet. Berkshire Hathaway is cheaper today than it was when it doubled in the year 2000, and intrinsically it is worth almost double where it sits at today's numbers -- which are growing.
Not only is the business strong, but it has the best management in the world. Three members of the Forbes 400 are high level executives or on the board, including the richest two people in the world. They didn't get there by making mistakes. Ajit Jain running insurance? Lou Simpson picking stocks? Warren Buffett and Charlie Munger running operations? Are you kidding me? This is the financial dream team.
In times of economic volatility and/or recession, people flock to safety, and gold doesn't own Geico. The time to invest is now.
It's hard to argue with that reasoning. While the company continues to produce excellent results and massive amounts of cash, the stock has basically tracked the S&P over the past five years. There may be some concern over Berkshire eventually being without Captain Buffett to steer the ship, but it's also important to remember that one of Buffett's great skills is recognizing good managers, and he will be the one picking his replacement (replacements?).
CAPS players who have been bullish on Berkshire have also taken a liking to Johnson & Johnson
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