Whether you are a Berkshire Hathaway shareholder or just curious about what Warren Buffett’s “masterpiece” looks like today, here is an interesting graphic from Sherwood News. Essentially, this is the asset allocation of BRK.B, broken down into wholly-owned operating businesses, shares of other publicly-traded companies, and cash (mostly Treasury Bills).
Some may be surprised to find that for every dollar you invest, this asset allocation is 70% into owning businesses and 30% into cash. Those that have tracked its history know that BRK has often had a significant cash pile relative to it’s total market cap. From Bloomberg (paywall):
There is also a bit of fuzziness as they own insurance companies and those insurance companies have roughly between $150 billion and $200 billion of float which can be invested (and considered an interest-free loan if the underwriting breaks even). Of course, this also means that Berkshire must be always be ready to pay out huge claims if certain events unfold.
The most recent discussion has focused on Buffett’s sale of half his Apple shares. I’m not really worried about it. As a shareholder, I have chosen to trust his management. When Buffett bought Apple stock, the P/E ratio was about 16. Today, Apple’s P/E ratio is over 32. Overall, the S&P 500 is also at higher P/E ratios relatively to historical averages. That makes these moves quite reasonable in terms of value investing.
Berkshire Hathaway makes up a very small percentage of my net worth, but remains a pseudo-actively-managed balanced fund with zero expense ratio that I love to watch. There are wholly-owned solid cash-spewing businesses. Shares of other solid cash-spewing businesses bought at fair prices. And just plain cash.
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What happens to all those juicy KO and other stock dividends? I hope they’re reinvested because BRK.B doesn’t pay a dividend itself.
I’m pretty sure they just go into the cash pile and Warren decides what to do with them after that. I doubt it’s auto-reinvested.
How much of a position do you have in Berkshire? I don’t think Ive seen that in the asset allocation breakouts.
It’s about 1% of total net worth, and I don’t include it as it’s part of my self-directed accounts, play money, fun money, whatever you want to call it. Really, it started from various bonuses and it has compounded from there. I like keeping BRK for brokerage bonuses because it distributes no dividends so there is no 1099-DIV and as long as I don’t sell there is no 1099-B either. Nice and easy, just ACAT to the next place.
I don’t have any shares at all, but was prepared to happily purchase one or several if ownership proved to offer a meaningful insurance discount. So far, it hasn’t, so I’m not planning to purchase any.
Oops! Sorry, misread Mike’s question as directed to my post…
I recently switched to Geico car insurance because my previous long-time, very low-cost insurance company, esurance, pulled out of doing businesss in California.
I’ve read that Geico provides an additional insurance discount, if you own even a single share of Berkshire Hathaway stock. On Geico‘s online quote-generating web page they refer to a list of organizations that belonging to should provide you with a discount for, and that includes being a shareholder.
But when I click that I am a stockholder, it doesn’t change the cost of the premiums.
Do any MyMoneyBlog readers know what’s up with this?
I read that too; I don’t have any experience actually getting the discount though.
You are referring to this page?
https://www.geico.com/landingpage/partners/berkshire-hathaway/index.htm
According to this old post, the discount varies by state from 0% to 10%.
https://slickdeals.net/f/6878928-geico-car-insurance-8-discount-for-owning-berkshire-hathaway-stocks-ymmy
I’d probably call them up direct and ask to get the official answer.
Yes, that’s the page I was referring to.
I actually did call to finalize my new policy and the agent used what seemed like the same drop-down list tool I did to try to get a further discount, but she said it didn’t change the quote premium either.
But I’m not satisfied that’s a definitive response, so thought I’d put the question before discount-seeking MyMoneyBlog readers. I will probably continue pursuing other avenues too and if a productive solution turns up, I’ll post it here. I’d expect Warren Buffett to be no less stubborn tracking down a promise made.