Vltava Fund, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. In its Q3 investor letter, Vltava Fund mentioned the two companies they recently owned and provided some updates about the fund’s assets as of the end of the recent quarter. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
In the Q3 2021 investor letter of Vltava Fund, the management firm mentioned Berkshire Hathaway Inc. (NYSE: BRK-A) and discussed its stance on the firm. Berkshire Hathaway Inc. is an Omaha, Nebraska-based multinational conglomerate company with a $629.4 billion market capitalization. BRK-A delivered a 19.38% return since the beginning of the year, while its 12-month returns are up by 29.93%. The stock closed at $418,539 per share on October 5, 2021.
Here is what Vltava Fund has to say about Berkshire Hathaway Inc. in its Q3 2021 investor letter:
“Berkshire Hathaway is and always will be associated with the name Warren Buffett. Writing about what Buffett has created in his 60 years at its helm would be like carrying coals to Newcastle. (The most detailed account is offered in Adam Mead’s book from the spring of this year: The Complete Financial History of Berkshire Hathaway: A Chronological Analysis of Warren Buffett and Charlie Munger’s Conglomerate Masterpiece.) It would also be to look backwards, which, while a common potential problem of all these corporate stories, given Buffett’s age, that is all the more apparent in the case of Berkshire. Fortunately, we know who will run Berkshire after Buffett, so it will be better to say a few words about that chosen successor. Or perhaps it would be better to say successors. Berkshire will be in the hands of the four people named above. All four of them are backed by very successful careers that to a large extent have been linked directly to Berkshire Hathaway.
The future CEO will be Greg Abel. Abel has worked at what is now Berkshire Hathaway Energy since 1992 and has been its CEO since 2008. He has played the lion’s-share role in taking Berkshire over the past two decades from virtually nothing to become a major energy player with USD 90 billion in assets. Inasmuch as Abel’s main task as CEO at the holding level will be asset allocation, his tenure at BHE is great preparation and he carries with him an excellent report card to begin with.
The most valuable part of Berkshire is still its insurance business. It is unquestionably a global leader, and much of the credit for that goes to Ajit Jain. He has been at the helm since 1986 and what he has built over time is unparalleled anywhere in the industry. Buffett once said: “If Charlie, I, and Ajit are ever in a sinking boat – and you can only save one of us – swim to Ajit.” I think that speaks for itself, and it is a good thing that Ajit Jain will continue to
remain in his position and create additional value for Berkshire shareholders.Berkshire’s publicly traded portfolio, which today totals about USD 500 billion, will be in the hands of Todd Combs and Ted Weschler. Both were very successful portfolio managers already before Buffett chose them as his future successors. Combs has been at Berkshire since 2010 and Weschler since 2012. Since that time, both have been managing smaller but progressively growing portions of the Berkshire portfolio. I think they will continue to be excellent. If the greatest living investor chose them as his successors from a plethora of candidates, we scarcely could wish for a better testimonial.
So this quartet will run Berkshire Hathaway after Warren Buffett will leave his position. There is only one Buffett, and there will be no other like him, but I nonetheless can imagine quite well that the quartet of his successors will be collectively even better than this Son of the Most High.”
Pixabay/Public Domain
Based on our calculations, Berkshire Hathaway Inc. (NYSE: BRK-A) ranks 12th in our list of the 30 Most Popular Stocks Among Hedge Funds. BRK-A was in 116 hedge fund portfolios at the end of the first half of 2021, compared to 111 funds in the previous quarter. Berkshire Hathaway Inc. (NYSE: BRK-A) delivered a -0.91% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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