Comments on: Guest post: The short case for Berkshire Hathaway Inc. (NYSE:BRK.A, BRK.B)

By: Glenn

Glenn — Thu, 18 Mar 2010 11:42:38 +0000

Extremely, extremely weak arguments. I did not find one argument of substance in here. Raj, this type of fame is not good, if it leaves you with a permanent legacy of looking like an idiot.

By: assman

assman — Wed, 17 Mar 2010 23:08:06 +0000

I think the Burlington acquisition was very bad and when it happened I knew it was the end of Berkshire Hathaway’s stellar returns. I viewed it as a direct signal from the Oracle that he couldn’t find any truly great businesses any more. A great business does not require large capital expenditures.

However I think BRK is at least 25 percent undervalued.

I found the short case unpersuasive, poor reasoned and self contradictory.

By: PCO

PCO — Wed, 17 Mar 2010 13:42:31 +0000

Why are we wasting our time on this clown? This guy is a know-nothing MBA desperately looking for a job. 30 seconds through this presentation makes it plain as day that this guy knows less than zero about investing and only marginally more about Berkshire Hathaway.

Hey Raj — you should apply for a job at CNBC. They love this kind of sensational, analysis-free “research.”

By: Contrarian Reader

Contrarian Reader — Wed, 17 Mar 2010 07:17:08 +0000

I think this is more about Raj trying to get a good job by posting something that is very much contrarian. A good risk/reward bet. If BRK/B goes down, he will look like a genius. If it goes up and he said it will go up, he is one in millions of people who say it.

Good marketing ploy. He learned a lot from his Cornell MBA studies – not exactly finance, but marketing. Being the Purple Cow, being dramatic…. kudos for that. Hey, it got him a WSJ article.

And he will probably get a job because of this coz Wall Street is dumber than you think.

By: Guest post update: Valuation for Berkshire Hathaway Inc. (NYSE:BRK.A, BRK.B) short case « Greenbackd

Wed, 17 Mar 2010 05:01:56 +0000

[...] 17, 2010 by greenbackd Yesterday I ran a guest post on the short case for Berkshire Hathaway Inc. (NYSE:BRK.A, BRK.B) by S. Raj Rajagopal, an MBA student at Johnson Graduate School of Management at Cornell [...]

By: David Merkel

David Merkel — Wed, 17 Mar 2010 03:56:59 +0000

I thought this was weak. I can think of better reasons to criticize Buffett. The author does not understand how Berkshire is primarily an insurance enterprise that uses its cheap source of funds to fund profitable businesses.

I received a copy of this as well, and did not think it was worthy of a personal response, much less publication.

By: greenbackd

greenbackd — Wed, 17 Mar 2010 02:30:03 +0000

Raj’s valuation is coming out tonight.

By: Ravi Nagarajan

Ravi Nagarajan — Wed, 17 Mar 2010 02:25:43 +0000

Sir, when you write things like “Ajit Who Jain” and “David Who Sokol” in an attempt to disparage men who are literally at the top of their industries, you do not build up any credibility. When you then fail to provide any valuation information to support your target price and then start referring to “beta”, I can tell you have failed to absorb any of the lessons taught by Buffett. I seriously suggest that you revisit the manner in which you are going about your valuation work along with thinking about how to respectfully construct an argument.

BTW, If you think that people here and on Guru Focus are upset merely because a short case against Berkshire was made, you would be wrong. It is the lack of analytical rigor and the rather silly and insulting personal attacks that have caused the reaction.

By: greenbackd

greenbackd — Wed, 17 Mar 2010 02:06:09 +0000

His valuation is coming out tonight.

By: Dougs

Dougs — Wed, 17 Mar 2010 02:03:16 +0000

I enjoyed this post and would have to say I agree with Raj, albeit for different reasons.

As Graham noted, (paraphrasing) any company, no matter wonderful, becomes a speculation if the price is high enough. Berkshire is that for me. Due simply to its size, it cannot continue to grow at the same rate it has in the past 30 years in the next 30 years, as it would become larger than the US economy. Wonderful company that Berkshire has been and still remains, I don’t think a share price of $123,575 constitutes a rational assessment of its current position and future prospects.

If I’m honest, I’m also a little uncomfortable with Buffett buying up bank stocks then giving advice to Obama on bail outs etc.

As a speculative effort I’ll say that I think a fair price for BRK.A shares would be more like ~$90,000. That is approx 15x average earnings for the trailing 5 years and 1.5x book value. Thoughts?