Is Berkshire Hathaway a Buy Without Warren Buffett?

Ajouté : 2026-05-11

[00:00:00]Fair enough, then let's talk about another growth stock where the main asset is the balance sheet. It doesn't pay a dividend and the market isn't really that impressed with it right now.

[00:00:08]Let's talk about Berkshire Hathaway in that case. So, it was the Berkshire Hathaway annual shareholder meeting and to be honest, we're covering this because I said we would in the last episode. It was interesting in its way and it was notable in certain ways. If you were looking for deep breaking news and you were looking at the headlines afterwards, I don't necessarily know what the headlines were because I didn't think there was a huge amount. I don't think that's necessarily a terrible thing. I wasn't particularly looking for Greg Abel to come in and say, "Right, and now we are building data centers."

[00:00:41]or anything of the sort, but I'm um interested in Steve and I were saying beforehand, probably the most interesting thing was the reactions to it from various other people. But anyway, revenues were up, profits were up, rail was up, utilities were up, insurance was up, pre-tax profits were higher than they were No one really cares. Stuff moving in the right direction. Sometimes it doesn't, this time it did.

[00:01:06]What the real interest was in was in this kind of rising cash balance thing that they have going on. It's now up to somewhere in the region of 380 billion.

[00:01:14]Greg spent quite a while explaining that there is a T-bill payable appearing on the balance sheet due to the timing of when they acquire and pay for T-bills. That means it's actually not quite 400 billion.

[00:01:26]It's actually sort of more in the sort of 380 or high 390s region. Different analysts are quoting slightly different numbers, but what my general sense was is that there's a lot of attention on that big heap of um cash and interesting to hear what Abel's thoughts on it were.

[00:01:46]And it also is reasonably clear to me that he's not going to get too much of a license for him. To some extent shareholders, to some extent commentators, mostly people who don't own the stock, I think, which is fine.

[00:01:58]It doesn't stop you having a view on it.

[00:01:59]Well, I have plenty of views on stocks I don't own. Um but he's not going to get too much of a license for sitting still with this for very long in the way that there's always been a kind of response since I've owned it from Berkshire Hathaway. It's been a or Berkshire Hathaway defenders, there's been a pretty good response, to be honest, which is that Warren Buffett does what the damn hell he pleases and you shut up. Um because uh he's Warren Buffett. Uh if he says we're not spending it, we're not spending it.

[00:02:24]If he says we're spending it on this thing, we're spending it on this thing.

[00:02:27]It may or may not work, but Warren Buffett has enough credibility uh to be able to do whatever the hell he pleases and people will think it's at least a defensible decision or as good as any other one they can think of. Greg Abel's not going to get that kind of um license. He is very much into the mode of describing the cash as an opportunity.

[00:02:47]Uh he took a shareholder question where they were asking what they thought he thought they should do with their cash and he said, "Don't be in a hurry to do anything with it. Having cash around is your opportunity to to seize things when they become available." And well, it's potentially a kind of big um opportunity if, like me, you're aware that Buffett owns still 15% of this company and you think they're building cash in order to buy back his stake when it eventually gets passed to charities who won't particularly want Berkshire Hathaway shares, but would rather have the cash for them. That's about 150 billion. I mean, it changes when the market cap changes, right? So, if it goes up a lot, they're going to need more cash to do it with. But, that's about 150 billion of your 380, so leaving about 230 um behind. Uh I was tagged into uh the Paul Briscoe Discord at the weekend with someone asking what I thought and indeed I saw an investor asking me um quite reasonable question of is there a reason to not buy it back now off of Buffett?

[00:03:44]And I don't know is the honest answer what the tax implications are, but here's something that could be the case.

[00:03:50]Uh like I say, this is speculative and I haven't bothered to look into it, but Buffett's cost basis on that stock is going to be incredibly low. So, if he sells it, he's going to have to pay a lot away in tax. If he gives it to a charity, I don't know how easily he can give it to a charity, and they acquire it at a cost basis of whatever the current share price is. Buffett can buy it back off them and they won't have to record a massive gain. I don't know whether that's how the US tax code works. Um, I genuinely no idea. It's possible from my perspective that there is a big tax advantage to Buffett not selling them at a massive massive profit, um, and then being taxed on them, but leaving them to a charity who then pays tax on them at the whatever their cost basis is, which is much higher to the current level.

[00:04:34]Um, the other thing though is kind of I'm not sure I'm in a rush for them to buy these things back. What for?

[00:04:41]Uh, so that we can say we were busy in Q2?

[00:04:44]I'm not really sure there's anything particularly to be excited about with Q2. I'm It might make the share count go down a lot and it will give people a sense of things are moving and so on, but it's there for when it happens and I'm not sure I'm in a tearing hurry in the next quarter to see anything happen and that's probably a good thing because Buffett did a big interview with CNBC where he said not a lot and he hasn't said a lot for a few years now, but he did say he thinks the markets are pretty much in casino mode.

[00:05:12]And I get it. In some places, it does look like there's a lot going into the AI kind of complex here and things It looks to me like cyclical things are getting bid very high. I mean, I don't know when I think they're going to come down or otherwise, but Berkshire under Greg is very clear that they're not going to be chasing AI for the sake of AI.

[00:05:32]Um, so that means they're largely on the sidelines.

[00:05:35]I My sense when I heard Greg talking was that there was really really nothing going on and I sort of worried if he said they're going to do anything radically different. I wouldn't have wanted him to to right, time to get all this going, then in that case. Partly because he did talk about how much Buffett still comes into the office and speaks with him. And if he does anything drastic that Buffett disapproves of, well, it's his show. He's the CEO, but I don't think it's particularly either wise or politically right around Berkshire to go doing things that you know you've had a conversation with Buffett. Buffett said, "I don't think that's a good idea." And you say, "Well, I'm the CEO. I'm going to go and do it."

[00:06:14]Even if that is right. Buy a Bitcoin.

[00:06:17]Yeah, we're going all in on Bitcoin.

[00:06:19]We're going to buy Coinbase and in fact we're going to buy whatever that vehicle from Tom Lee is and strategy from Michael Saylor. We will use this to hedge out our otherwise boring portfolio.

[00:06:29]Um >> [laughter] >> We're We're acquiring strategy. We're acquiring strategy and then we're just going to shut it down as a service to the world. But a couple of final thoughts here. One area where I was less convinced actually and I realized that I'm very positive on this stock in general. Thing that caused me the most consternation was the part of the show that involved Ajit Jain who seemed to me very old in that part of things and he effectively didn't hear a question and therefore I'm convinced the reason he gave a complete non-answer to a question was just about AI was just because he hadn't heard it properly.

[00:07:09]He's another one with a lot of credit in the bank. He's very clearly a very very shrewd and intelligent insurance operator, but I he started to give me vibes of the old man shouting at the clouds a little bit in that and I became more interested in what the kind of follow-up and succession plan for Ajit might be that was discussed briefly. There is a decent bench there, but not sure quite how long I think and in so far as he's been a huge asset to Berkshire, that raises questions on their insurance side at least I think from a kind of key man perspective. It's at a price to book of 1.4 today, around 1.2 is where the company has historically been heaving into buybacks, and as Buffett said, it's undervalued at 1.2.

[00:07:52]That was a while ago, may or may not still be true, might be cheaper at 1.4.

[00:07:56]I did buy more of it in the week just gone by, but that's because my LISA bonus thingy came in from the government, so I automatically just stick it in there instead of into an index, cuz I like it better.

[00:08:07]Um Steve, what do you think about this, if anything? Might be the last time we report on Berkshire unless it moves, which it never does.

[00:08:14]Yeah, and not not much really, see.

[00:08:15]There wasn't an awful lot in this in this call. I'm guessing the bit you highlighted when they asked him about AI is when he went on talking about how the Buffett deepfake, was that the thing that you were thinking of? He was complaining about that. Someone tried to fire off a question about what AI kind of means for Berkshire in the insurance business, and they he seemed to kind of dismiss that threat, which doesn't play terribly well with me in the sense that Berkshire's GEICO uh has really struggled by being left behind on telematics. They have systematically underestimated tech, and I think he was thinking about it or heard it as a question about the company more broadly, and he said, "Well, look, AI's not going to be able to tell you what stocks to buy." I mean, that's probably true. It's not really clear if many people can tell you what stocks to buy.

[00:08:57]It has limitations.

[00:08:59]It is clearly making very real progress in a lot of places, um though whatever you think about it and whether you think its competitive position is any good.

[00:09:07]Palantir is getting people's data, turning it into valuable stuff, and helping companies do things they couldn't previously do, and I think dismissing that threat is very unwise.

[00:09:17]Um so I was a bit wary not just that was a legit James view, but that's what he thought the answer to the question might have been, because I didn't really what that question was.

[00:09:26]The the the bits that jumped out at me, Steve, was I I thought he was talking about the bit where he was complaining about the AI um deepfake of Warren Buffett, which is um a strange bit, but yes, there was the the the BNSF new CEO um talked about Kate uh Kate Farmer talked about um how they'd been looking at insuring tankers on the Strait of Hormuz.

[00:09:54]Um but actually the only way that they would insure them is if there was a Navy US Navy escort through the uh area, of which they have insured no boats. Um so um Oh, sorry, no, that was uh sorry, that was Was that Greg Abel? Sorry if I got that mixed up.

[00:10:13]It's a mixture of Ajit and Greg. So, the question was what would it take for you to insure a tanker in the Strait or start insuring tankers in the Strait of the Hormuz? And Ajit's answer was depends on price.

[00:10:24]Uh was his kind of short answer to this.

[00:10:26]>> That's right, yeah. Yes, and um yes, so sorry, the BNSF uh CEO, that's the uh the railway one, was it? She was talking about front-loaded shipments, so that was right. That was quite an interesting uh part where they said that essentially the comparison year over year is a bit spotty because so much stuff was front-loaded to try and get around the implementation of tariffs that um really comparing um you know, it is not apples to apples really, so um yeah, that was that was particularly um interesting. Um yeah, Abel talked a little bit, Steve, which was interesting about concentrated equity um portfolio philosophy, which is interesting for Berkshire, because I think the last time I checked, they had 44 positions or something like that.

[00:11:08]It's not what I would describe as um concentrated. Um but yeah, the the words were something like Berkshire is a conglomerate, and we must recognize that. Uh but we are a unique conglomerate in that we can move our capital efficiently uh from insurance to non-insurance, from equities uh or just hold it in cash. And I thought to myself, I'm not sure that's I think unique. [laughter] It sounds sounds like something pretty much everyone can do. It's almost like Greg Abel has never worked anywhere else before. Um So, yeah. I mean, there was not much in here, Stephen. And I'm acutely aware we're um we're we're running on running out of time here. And we we did say we'd talk about Joules and Go. So, have you got any sort of closing bits or do you want me to shuffle on?

[00:11:49]Not really. I think I'm on the side here that says being patient. And what the more I hear what I consider to be ordinary investors shouting about uh they need to do buybacks, they need to do dividends, they need to do whatever else, use the cash, or sell the stock, or whatever. I'm reminded of the fact that JP Morgan's average investor uh tends to return about 2.something% because they just can't sit still for long enough. So, I also struggle to sit still. So, I'll let these guys do it for me is my general approach. You've been watching a segment from the Playing FTSE Show brought to you in association with our favorite broker, Trading 212. For the full version of the show, check us out on Spotify, Apple, or wherever you get your podcasts.

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