How to Tell if Your Fund Invests With Buffett
Fund investors, you may be investing with Warren Buffett and not even know it. The investing legend’s firm, Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B), which holds its annual meeting Saturday, can be found in many mutual fund portfolios. Of course, unlike many of the individual company names found in fund portfolios, investing in Berkshire is almost akin to investing in another fund. The firm owns outright or invests in scores of companies, from giants such as the Burlington Northern Santa Fe to small businesses such as The McDowell News newspaper in Marion, N.C. (estimated population: 7,964). See full article morningstar.com
A Come-to-Buffett Moment
My colleague Lee Davidson alerted me to an interesting working paper by Eugene Fama and Kenneth French, “A Five-Factor Asset Pricing Model.” Fama and French are famous for their three-factor model, which uses market, value, and size characteristics to explain stock returns. The Fama-French model is taken as holy writ by many investors of the passive persuasion, especially advisors who’ve been through Dimensional Fund Advisors’ boot camp. After more than 20 years, Fama and French have embraced the notion that size and value may not be the best factors to explain stock returns. Their new paper, the first draft of which was released in June 2013, finds that two additional factors–profitability and investment–make redundant the value factor. See full article morningstar.com
How Will Berkshire Look After Buffett?
Although the makeup of Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)’s C-suite post-Buffett remains in question, the current names in place should enable a smooth transition and keep the firm profitable, says Morningstar’s Gregg Warren. See full article morningstar.com
Berkshire’s Moat Not Eroding
Management’s ability to continuously reinvest earnings into Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) subsidiaries, which mostly have their own moats, will keep the firm’s competitive advantages solid over time. See full article morningstar.com