Berkshire Hathaway: A Great Company I Can't Buy

What's not to love and admire about Warren Buffet, affectionately known as The Oracle of Omaha? A man who has been well known in the investment community as the guru of gurus—few people in the investment world fail to perk their ears up when the man speaks.

I listen too, and quite intently.

Several times I have considered buying shares of the company he runs, Berkshire Hathaway, which owns many well-known and profitable businesses like Geico Insurance, See's Candies, Dairy Queen, Pilot Flying J and many others. The company also has major controlling interests in several other businesses like Coca-Cola and others.

It's a pretty long list with lots of familiar names.

And when it comes to diversification, a key element to consider in any successful portfolio, Berkshire Hathaway is as diversified as a company can be, investing in businesses from retail to insurance to logistics, pipelines, rail roads, real estate, and banking. 

Add to that, thanks to the investing genius of Warren Buffet and his sidekick who is just as brilliant as Buffet is, Charlie Munger, it is easy to say it's not only a great company to own. It's extremely well run and profitable as well, having offered investors impressive returns over the years.

So, what's my issue?

For me it's simply that the company is too closely connected to Warren Buffet himself. He's a man who is one unto himself. There have been few like him before, and once he's gone, I am not sure there will be another quite like him.

When it comes to the company he runs, he's the main attraction. His words matter. Investors trust in his judgement. His annual meetings draw in huge crowds of people who want to enjoy the experience and hear what The Oracle of Omaha has to say. 

His annual meetings aren't just about what's happening in the markets, or with the business, or even what his outlook of the economy happens to be. It's an event, done convention style with lots of fun and entertainment thrown in the mix—it's a shareholder's meeting unlike any other.

It's an experience and moment not unlike going to see The Rolling Stones or Metallica. You're going to want to tell your friends. You're going to want to share what happened there.

While Warren Buffet seems healthy and going strong, he's 93. Charlie Munger is 99 and will turn 100 in January. And again, Warren Buffet essentially is Berkshire Hathaway. The man and the company are nearly inseparable when you think of them.

The reality is that no one lives forever. Not even The Oracle. He will pass, as will Munger, and while there is a well-planned successor in place in Gregory Abel, one wonders, despite his being a protégé of sorts, who has been vigorously vetted and groomed for the position to take over the reins when Buffet's gone, whether he has the same intellect and character that Buffet has gifted us with over many decades.

There is no doubt that Berkshire Hathaway will exist long after Warren Buffet and Charlie Munger are no longer with us. But can one expect some changes under Abel? I think that's obvious. And what about Abel's successor? Who takes over if Abel dies or simply decides he doesn't want to do it? What does his succession plan look like? And how careful will his selection be compared to Buffet's?

Think The Tonight Show with Johnny Carson. There was something about that show that just made it Johnny's, even though to be fair, he wasn't the original host of the show. But also, to be fair, Jack Paar was no Johnny Carson. Carson made that show. And no one after him, even Jay Leno, could quite capture the same love and admiration nor audience that Carson could. 

Berkshire Hathaway wasn't always Warren Buffet either. Warren Buffet made the company.

When Johnny Carson bid his farewell and drew himself behind the curtains for the final time, the show may have gone on. But it was not at all the same show, and never has been since.

I think of Berkshire Hathaway this way post Buffet. The company will remain and will probably still be a great company. It may bear the same name. But it will never be the Berkshire Hathaway that makes it so appealing as an investment today.

In other words, will it be the Berkshire Hathaway we know today with Abel in charge where investors will be as excited about it? Will Abel's words have the same interest and appeal as when Buffet speaks?

I don't think so.

And for that reason, while I love and admire Warren Buffet and love and admire the company he built, it's a tough sell for me to buy shares because what you are buying is essentially Warren Buffet when you buy the stock.

And he's on short time.

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©2023 by Jim Bauer. All rights reserved.

Cartoon generated by AI. Caption by Jim Bauer. ©2023 by Jim Bauer. All rights reserved.