So you think you know Buffett’s secret investment strategy. What is it? Buffet is a value investor who buys companies at deep value. Ask this question to any investor in financial world and he/she would respond with this answer with a blink of an eye. That’s true and correct. But another significant characteristics of Buffett’s portfolio is dividend growth investing. Not much has been written about this aspect of Buffett’s portfolio. Let us take a little deeper look into Berkshire Hathaway’s (BRK) holdings and analyze them from dividend investing perspective.
As of 4Q 2008, BRK portfolio had a total of 60 companies. The total investments in top ten companies consist of approximately 85% of the portfolio while the remaining 15% is invested in 30 companies. Now, this could be viewed as a “highly concentrated portfolio” or “portfolio anchored to good stocks”. Has Buffett forgotten the meaning of diversification or he just does not believe in diversification per se?. The table below shows the top 10 holdings, their percentage in BRK portfolio, and dividends per share. Continue reading rest of this article…
Three Pillar of Berkshire’s Intrinsic Value – What do we Learn?
I am not a hardcore follower of Buffett’s investing philosophy. It is not because I do not agree with Buffett’s/Graham’s investing philosophy, but primarily because, my situation is different. The environment which influences my investing decisions is quite different than in which Buffett makes his decisions. Having said that, I like to understand his thought process to see if there is anything that I can use. I may not be able to use them on ‘as is’ basis, but at least the notion behind them can be applied. For example, I like Buffett’s practice of asking its holding companies to share a significant portion of earnings in the form of dividends. He believes he is in a better position to use this capital than company management.
Buffett’s letter to shareholders is released as a part of Berkshire Hathaway’s (BRK) annual reports. In almost all cases, I completely ignore CEOs/MDs letters in annual report. They are pure garbage in a sense they do not tell you anything. That is not a case with Buffett’s letters. Each and every year, his letters provide an insight in his thought process. This year was no different. Continue reading rest of this article…