He's saying "Don't buy my company's stock!" I always wonder if Warren Buffett, back when he was a 28 year old young man; 2 years into his investment partnership would buy a company like his conglomerate - Berkshire Hathaway...
The answer has been NO for a while. He is not only the best but also the most candid investor of our time - bar none. And, each year in his annual letter to shareholders the picture looks a little worse. Now, I'm not saying that BRK.A or BRK.B cannot or will not outperform the market for the next 20 years.
I'm simply stating the fact that the young Mr. Buffett would more than likely NOT BUY BRK.A. He seems to feel that it's not a stellar buy with the way he's spoken about it for the last few years. Then again, he’s never promoted his own stock and it’s done very well.
Why am I saying all of this?
Because in my opinion I think Warren Buffett should start issuing dividends. If nothing else a one time dividend the each year they don’t use their cash to buy stocks would make sense. Otherwise that $12 Billion a year net profit will just pile up. This is exactly what he himself has called for when a company cannot put the money back into its business and get high returns. What happens usually when any one company has too much cash? It starts making bad decisions.
Berkshire Hathaway and Ford Motor Company are the only two businesses in the Fortune 100 not to issue a dividend.
Now, Mr. Buffett has already said (on many occasions) that the returns in the future will be much lower than what the shareholders have seen in the past. To me this is obviously the biggest problem any investor (or company) could have. The lack of good businesses that fit your capital structure! Berkshire Hathaway will probably end up just like a big mutual fund at Fidelity (which manages a trillion dollars) and as many mutual funds, be destined to average returns.
I hope he has relayed this message to his "successors" because they are in for a big wake up call. Imagine being able to manage $1 billion dollars for a hedge fund and create 25% annually on a 2 and 20 basis. You're taking home close to $100 Million a year. Now, for some reason I don't think they'll get the same kind of pay packages at Berkshire Hathaway.
Then again, maybe that is exactly what will happen?!
___________________________________________
Jonathan D. Poland is the Founder, Editor and Chief of the PigsGetRich Investment Network. www.pigsgetrich.com
The answer has been NO for a while. He is not only the best but also the most candid investor of our time - bar none. And, each year in his annual letter to shareholders the picture looks a little worse. Now, I'm not saying that BRK.A or BRK.B cannot or will not outperform the market for the next 20 years.
I'm simply stating the fact that the young Mr. Buffett would more than likely NOT BUY BRK.A. He seems to feel that it's not a stellar buy with the way he's spoken about it for the last few years. Then again, he’s never promoted his own stock and it’s done very well.
Why am I saying all of this?
Because in my opinion I think Warren Buffett should start issuing dividends. If nothing else a one time dividend the each year they don’t use their cash to buy stocks would make sense. Otherwise that $12 Billion a year net profit will just pile up. This is exactly what he himself has called for when a company cannot put the money back into its business and get high returns. What happens usually when any one company has too much cash? It starts making bad decisions.
Berkshire Hathaway and Ford Motor Company are the only two businesses in the Fortune 100 not to issue a dividend.
Now, Mr. Buffett has already said (on many occasions) that the returns in the future will be much lower than what the shareholders have seen in the past. To me this is obviously the biggest problem any investor (or company) could have. The lack of good businesses that fit your capital structure! Berkshire Hathaway will probably end up just like a big mutual fund at Fidelity (which manages a trillion dollars) and as many mutual funds, be destined to average returns.
I hope he has relayed this message to his "successors" because they are in for a big wake up call. Imagine being able to manage $1 billion dollars for a hedge fund and create 25% annually on a 2 and 20 basis. You're taking home close to $100 Million a year. Now, for some reason I don't think they'll get the same kind of pay packages at Berkshire Hathaway.
Then again, maybe that is exactly what will happen?!
___________________________________________
Jonathan D. Poland is the Founder, Editor and Chief of the PigsGetRich Investment Network. www.pigsgetrich.com
