Is Berkshire Hathaway (BRK-B) A Smart Long Term Buy?

GoodHaven Capital Management, a concentrated portfolio investment management firm, published its fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 7.93% was recorded by the fund at year end of 2020, below its S&P 500 benchmark that delivered a 17.46% return in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

GoodHaven Capital Management, in their Q4 2020 investor letter, mentioned Berkshire Hathaway Inc. (NYSE: BRK-B) and emphasized their views on the company. Berkshire Hathaway Inc. is a New Bedford, Massachusetts-based multinational conglomerate company that currently has a $577.04 billion market capitalization. Since the beginning of the year, BRK-B delivered an 9.30% return, extending its 12-month gains to 41.06%. As of March 25, 2021, the stock closed at $250.75 per share.

Here is what GoodHaven Capital Management has to say about Berkshire Hathaway Inc. in their Q4 2020 investor letter:

“Berkshire’s recent operating results have been solid. The investment portfolio has rebounded dramatically, the stock buyback pace accelerated in Q3 2020, and they have been more active putting cash to work. Our material Berkshire purchases made earlier in the year, as the markets swooned and critics lambasted Berkshire, now look even better. A glance at some of Berkshire’s recent new investments (Dominion’s natural gas assets, Barrick Gold, EW Scripps, Snowflake and a basket of Japanese trading companies) points to a corporate culture, management team, and organization that continues to evolve. I’m not surprised, but am glad to see the proof of that part of our thesis. Sadly, we all know that one way or another Mr. Buffett and Mr. Munger’s tenure at Berkshire will end one of these days. That time – whenever it is – is not the time to evaluate and react to how one feels about a post Buffett/Munger Berkshire – that time was yesterday – which we have. Berkshire engenders a lot of criticism for perceived “underperformance”. However, from mid-2015 through mid-2020 Berkshire’s book value/share growth slightly beat a much riskier S&P 500, though the stock lagged. This is part of the opportunity. We estimate that Berkshire at present sells for only about 1.2x book value and materially below our estimate of intrinsic value using Mr. Buffett’s “five asset laden groves” methodology.”

Krista Kennell/

Our calculations show that Berkshire Hathaway Inc. (NYSE: BRK-B) ranks 18th in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Berkshire Hathaway Inc. was in 110 hedge fund portfolios, compared to 109 funds in the third quarter. BRK-A delivered an 11.87% return in the past 3 months.