Michael Burry
Author of Cassandra Unchained, Former Hedge Fund Manager at Scion Asset Management
Berkshire Hathaway is no longer an attractive investment because Warren Buffett's successor lacks his patience for the fat pitch. The biggest fear was that whoever followed Warren would be too old and otherwise not Warren, and that fear has come true. x.comÂ
Berkshire Hathaway is built for long-term survival rather than maximum returns, earning a Risk Shield rating of 95/100 that puts it in the top 5% of stocks globally. Growth is average and quality only slightly above average, but the balance sheet holds a record $397 billion of cash, 31% of total assets, with negative net debt, low beta and low volatility. x.comÂ
Berkshire Hathaway risks another five years of returns decimated by big tech, which is too strong. Greg Abel should study Jensen Huang every day, or it will come at great cost to shareholders. Berkshire is more than an insurance company now, and missing Google and Amazon, which it has acknowledged as mistakes, was bad in the long run, not just the short run. x.com x.com x.comÂ
Berkshire Hathaway benefits from a flight to low-beta quality stocks that are not burdening themselves with AI debt. Its shares are up 10% in October, while three of its largest holdings, Apple, Coca-Cola and Chevron, have been surging. Boring pays. x.comÂ
Berkshire Hathaway will be remembered as a dinosaur because the age of value investing is gone. By the end of 2027, 20 other companies will be bigger than Berkshire. Per Kalshi, it now holds more cash than at any point in its history. x.comÂ
Berkshire Hathaway offers no edge over simply owning the S&P 500. Its supposed defensiveness does not hold up, since both fell over 50% in the financial crisis and over 30% in 2020. Investors worried about a recession can keep some cash themselves rather than rely on Berkshire's cash pile. x.com x.comÂ
Berkshire Hathaway is a hedge against the market in current conditions, not a vehicle to beat it, which explains its nearly $400B in cash and treasuries. x.comÂ
Berkshire Hathaway's recent bets show impressive mental dexterity, but they are still small dollars for a company its size. It bought Alphabet above its long-term average multiple, at more than twice its price of a year earlier, perhaps the highest multiple Berkshire has paid for an investment that size, apparently betting on good returns from roughly $200B of growing AI capex. It also bought Delta despite Buffett calling airlines a mistake after COVID. x.com x.comÂ
Berkshire Hathaway's capital allocation has changed for the worse under new leadership, as its $8.5B all-cash Taylor Morrison acquisition buys a homebuilder just as home prices reverse, new homes lose their premium and goods and commodity inflation takes off. Its large Alphabet stake looks similarly unwise. x.comÂ
Berkshire Hathaway is an attractive hedge against speculative holdings because its fortress balance sheet gives it optionality either way. If markets do well, it cruises with existing assets and collects yield on its cash. If markets drop, it can buy the dip like no other. x.com x.com x.com x.comÂ
A mix of Marvell, Broadcom, Amazon and other Big Tech is likely to outperform Berkshire Hathaway with relatively low risk in the years ahead, extending Berkshire's heavy underperformance versus a basket of Big Tech. x.comÂ
