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Why Berkshire Hathaway (BRK.B) Stock is a Compelling Investment Case

Black Bear Value Partners recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of -22.3% (net) in the first nine months of 2020, underperforming its benchmark, the S&P 500 Index which returned 5.6% in the same period. You should check out Black Bear Value Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Black Bear Value Partners highlighted a few stocks and Berkshire Hathaway Inc (NYSE:BRK.B) is one of them. Berkshire Hathaway Inc (NYSE:BRK.B) is a multinational conglomerate holding company. Year-to-date, Berkshire Hathaway Inc (NYSE:BRK.B) stock lost 6.3% and on October 13th it had a closing price of $212.31. Here is what Black Bear Value Partners said:

“For more discussion on Berkshire I would refer you to past letters as we have discussed it at length.

In the 2nd quarter of 2020 Berkshire bought $5.1BB of stock, which is the most ever in a single period. Despite this, their cash holdings rose to $140BB in total. They have since deployed some of this cash in the 3rd quarter. It remains to be seen if they continued to buyback their stock in Q3. We will find out in the coming month.

Net-net I like owning Berkshire for similar reasons as before. It is very cheap for such high-quality businesses. While some punish the valuation for the cash holdings, prudence seems to be an unrewarded virtue at present.

Stock prices can go anywhere and be disconnected from underlying business performance. The collection of businesses at Berkshire (GEICO, BNSF railroad, BH Energy etc.) will continue to perform and expand their moats over time. This is a safe compounder which will prove it’s worth over the long-haul.”

Krista Kennell/Shutterstock.com

Last month, we published an article revealing that Berkshire Hathaway Inc (NYSE:BRK.B) stock has underperformed the S&P 500 Index in the trailing one year period.

In Q1 2020, the number of bullish hedge fund positions on Berkshire Hathaway Inc (NYSE:BRK.B) stock increased by about 2% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Berkshire Hathaway’s growth potential. Our calculations showed that Berkshire Hathaway Inc (NYSE:BRK.B) is ranked #16 among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free enewsletter below to receive our stories in your inbox:

Disclosure: None. This article is originally published at Insider Monkey.