We recently published a list of Warren Buffett Disciple Guy Spier’s 10 High Conviction Stock Picks. In this article, we are going to take a look at where Berkshire Hathaway Inc. (NYSE:BRK.A) stands against Guy Spier’s other high conviction stock picks.
Guy Spier’s Aquamarine Capital Management is a Zurich, Switzerland-based investment manager that employs the same long-term oriented, value investment approach as Warren Buffett, who Mr. Spier proudly considers himself a disciple of.
Spier earned a degree in philosophy, politics, and economics from Oxford University in 1988 and followed that up with an MBA from Harvard Business School. Foollowing that, he spent several years working as a researcher and investor on Wall Street, including stints at Braxton Associates and Buffett’s Berkshire Hathaway, the latter of which inspired him to launch his own value investing fund in 1997.
Spier is noteworthy in the investment world for his $650,100 lunch (alongside Mohnish Pabrai) with Warren Buffett in 2007, which was purchased through a charity auction. Spier took several important lessons from that meeting, including the necessity of saying no, and ultimately wrote a book about his takeaways from that lunch and his broader investment journey entitled ‘The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment’.
Mr. Spier makes all of his firm’s investment decisions himself and is an even more ardent value investor than Buffett, holding on to many of his positions for several years without touching them. In the second quarter the fund added two small new positions to its 13F portfolio while otherwise leaving the rest of it untouched. Its 13F portfolio held $263 million worth of assets on June 30, 74% of which were invested in finance stocks.
Aquamarine’s total return stands at 874% since inception through the end of 2023, or 9% annually, outperforming the S&P 500’s 717% returns during that period. Spier’s fund hasn’t been as successful in recent years however. It returned 18.7% last year, which underperformed the market, the sixth-straight year it’s failed to top the market. 2000, 2002, and 2006 were three of the fund’s strongest years, as it beat the market by more than 20%.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here). That’s why you should pay close attention to this important indicator.
A team of insurance professionals in a boardroom overlooking a city skyline.
Berkshire Hathaway Inc. (NYSE:BRK.A)
Value of Aquamarine Capital Management’s 13F Position (6/30/2024): $57.2 million (BRK.B), $18.4 million (BRK.A)
Number of Hedge Fund Shareholders (3/31/2024): 155
Topping the list of Guy Spier’s stock picks is his large investment in Warren Buffett’s holding company Berkshire Hathaway Inc. (NYSE:BRK.A). Aquamarine Capital has owned 140,600 shares of BRK.B dating back to late 2015 and the stock has ranked as its top pick throughout much of the intervening 8+ years. Berkshire Hathaway has consistently ranked as one of hedge funds’ favorite stocks, as fellow investors try to capture just a little bit of Warren Buffett’s magic.
Berkshire Hathaway Inc. (NYSE:BRK.A) ranks as the The Most Profitable Insurance Company in the World, generating $3.6 billion in underwriting earnings during its 2023 fiscal year. Geico is one of several insurance companies owned by Berkshire, which also owns a range of other businesses such as Duracell, Dairy Queen, BNSF, and Fruit of the Loom. The company’s fiscal Q1 earnings jumped by 41% to $5.19 per share, while operating profit soared 39% to $11.2 billion.
In addition to owning several high-profile companies, Berkshire Hathaway Inc. (NYSE:BRK.A) also holds Buffett’s gargantuan investment portfolio, which was valued at $332 billion on March 31. The company is also sitting on a record pile of cash totaling $189 billion as of March 31, giving it ample ammunition to make a major acquisition if its finds the right deal. In the meantime the company has been buying back more of its stock to put some of its cash to use, taking $2.6 billion worth of its shares out of circulation in Q1.
Overall, BRK.A ranks 1st on our list of Guy Spier’s high conviction stock picks. While we acknowledge the potential of BRK.A, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BRK.A but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.