Without Warren Buffett, Berkshire Hathaway is no longer an attractive investment: ‘Big Short’ fame Michael Burry

Berkshire Hathaway has lost its charm as an attractive investment after Warren Buffett handed over the reins to his successor Greg Abel, said veteran American investor Michael Burry.

Burry, who is famous for correctly predicting the 2008 financial crisis, said that his biggest fear for Berkshire Hathaway was that when Buffett finally steps down, his successor would be too old and “otherwise not Warren”, and hence he would not have patience for his “fat pitch”. “I believe this fear has come true. I do not find Berkshire an attractive investment going forward,” he wrote in a blog post.

Michael Burry noted that not much of Berkshire’s large cash pile has been spent. “However, these first steps look to be more framing moves than investment moves,” he added.


How is Greg Abel spending Berkshire's cash pile?

This comes as Greg Abel, as the new Berkshire Hathaway CEO, has started using some of the company’s record cash pile. The firm spent around $4.5 billion to buy back its own shares during the April-June quarter, and purchased nearly $20 billion worth equities during the period.

Among its purchases was about $10 billion of additional Alphabet stock, the parent company of Google and YouTube, making it one of Berkshire's largest equity holdings. Berkshire ended June with $364.7 billion in cash and cash equivalents, down from a record $380.2 billion three months earlier. The company also said it spent $6.8 billion in late July to acquire shares of homebuilder Taylor Morrison, according to Reuters.

Also read | Berkshire Hathaway spends down cash pile under CEO Greg Abel

Berkshire's quarterly operating profit increased 16% to $12.98 billion, from $11.16 billion a year earlier, exceeding analysts' expectations. Net income more than doubled to $25.67 billion, from $12.37 billion a year earlier. The figure includes unrealized gains and losses on Berkshire's stock portfolio, which the company has urged investors to look past because of their volatility. Revenue rose 10% to $101.81 billion after remaining largely stagnant in previous quarters.

Warren Buffet's Google bet

In a recent interview with CNBC, Buffett said it was him, not his successor and new Berkshire Hathaway CEO Greg Abel, who led the conglomerate’s massive investment in Google-parent and tech giant Alphabet, although it is not among his favourite bets. “I initiated it,” he said in an interview with CNBC.

“I am not doing anything that he does not approve of. He is not doing anything I don’t approve of. We talk all the time, but he is the decider,” the 95-year-old Berkshire Chairman added, referring to his CEO successor, Greg Abel.

Also read | Warren Buffett says he initiated Berkshire's Alphabet bet, but it is not his favourite. Here's why

(With inputs from agencies)
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