Saga Partners, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be seen here. During the second half of 2021, the Saga Portfolio (“the Portfolio”) decreased 17.1% net of fees. This compares to the overall increase for the S&P 500 Index, including dividends, of 11.7%. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Saga Partners, in its Q4 2021 investor letter, mentioned Berkshire Hathaway Inc. (NYSE: BRK-A) and discussed its stance on the firm. Berkshire Hathaway Inc. is a San Francisco, California-based multinational conglomerate company with a $720.6 billion market capitalization. BRK-A delivered a 7.38% return since the beginning of the year, while its 12-month returns are up by 33.80%. The stock closed at $483,900.00 per share on February 09, 2022.
Here is what Saga Partners has to say about Berkshire Hathaway Inc. in its Q4 2021 investor letter:
“Traditional “value investors” may scoff at considering earnings power as anything above net income, while traditional “growth investors” may scoff at looking below revenues. I am neither in the traditional sense and am simply trying to assess intrinsic value.
Contrary to what many traditional value investors believe, just because a company does not have free cash flow or pay dividends today does not mean it has no value. Berkshire Hathaway has never paid dividends to shareholders, but their ability to pay dividends has grown over time because they reinvested cash flows back into their business, which has been appreciated by a higher market value.
Using historic gross profits is just a proxy for a company’s unit economics, which can then be extrapolated into the future until end markets are more saturated, growth slows, operating margins normalize/mature, and the company provides net profits (dividends) to owners. A more comprehensive analysis would dig into each company’s unit economics, but for the purposes of this letter gross profit growth will provide a reasonable proxy for earnings power growth.”
Investments, Finance
Our calculations show that Berkshire Hathaway Inc. (NYSE: BRK-A) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. BRK-A was in 106 hedge fund portfolios at the end of the third quarter of 2021, compared to 116 funds in the previous quarter. Berkshire Hathaway Inc. (NYSE: BRK-A) delivered a 12.74% return in the past 3 months.
In October 2021, we also shared another hedge fund’s views on BRK-A in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
