When Berkshire Hathaway shares hit a 20-month low in September, some investors speculated that the magic is gone for the firm’s legendary CEO Warren Buffett.
Not so fast, says Whitney Tilson, long-time Buffett watcher and founder of money management firm T2 Partners. Berkshire Hathaway represents the biggest position for the firm’s funds.
“One of the greatest risk factors is that Buffett suddenly starts losing it and destroying value by allocating capital poorly,” Tilson tells Steve Forbes, chairman of Forbes Media.
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“So we watch him very closely. And so far anyway, it’s remarkable. I’m not sure I’ve ever seen an 81-year-old person as nimble and spry mentally. And he’s seemingly getting better with age.”
Tilson is impressed with Buffett’s willingness to venture abroad to invest in PetroChina, for example, earning a 700 percent gain.
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Buffett showed flexibility in purchasing Burlington Northern, after viewing the railroad industry as a loser for 50 years, Tilson says.
And Buffett’s latest big move, a $10.7 billion investment in IBM, makes sense too. “He’s looking for things that he can buy and hold for decades,” Tilson says. And Big Blue fits that bill.
Tilson thinks Berkshire stock is 35 percent undervalued.
Hedge fund manager Doug Kass, a huge Buffett fan over the years, is less impressed and recently sold his shares.
The IBM investment indicates “more ordinary and plain vanilla investments will be the feature of Berkshire's portfolio strategy in the future,” he writes on Real Money Pro.
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