Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial) – We believe it is the best run company in the world. They have great operating companies that generate huge amounts of cash relative to the capital deployed. When they cannot deploy them at an acceptable rate of return, they give it to Warren Buffett (Trades, Portfolio) to redeploy them in the purchase of new companies or the stocks of excellent companies at a reasonable price. This is a type of company that executives should study carefully. Instead they are given all kinds of cookie cutter type examples in business schools. Berkshire Hathaway has been operating since 1965 under Buffett and it is not a one-day wonder.
Berkshire Hathaway has grown to as much as 32% of the Fund’s net assets over the years due to significant capital appreciation. We are quite happy to hold them for the long-term, but the overconcentration of securities over 10% of the Fund can be frowned upon by regulators. As a result, we have reduced the Fund’s position of Berkshire Hathaway in early 2020. Some of the replacements may be stocks as well as fixed-income instruments.
From Francis Chou (Trades, Portfolio)'s Chou Associates Fund 2019 annual letter.
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