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Comment by mrjivraj | Hacker News Reader

https://www.cnbc.com/id/218.html

This reminds me of a study which showed that even if you bought the same stocks a month after Buffett and his holding company Berkshire Hathaway disclosed their own purchases, you'd still be way ahead of the game.

"The market ... appears to under-react to the news of a Berkshire stock investment since a hypothetical portfolio that mimics Berkshire's investments created the month after they are publicly disclosed earns positive abnormal returns of 14.26% per year."

But Buffett is a long term investor. I am not sure how long the Pelosis hold their stocks...

But yes, insider trades :(

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There's a community on Reddit that studies Berkshire's purchases (investments made by Buffett/Weschler/Combs) and tries to follow, purchasing only below what Berkshire paid:

https://old.reddit.com/r/brkb/

For example, in 2020 and early 2021 Berkshire paid $59 for Verizon, buying $9 billion worth (a huge Buffett/Weschler telecom investment). Verizon now trades at about $54, so this community is buying.

Wouldn’t this bias towards the “losers”?

Short-term stock price changes are noise.

Berkshire's investments are based on a deep understanding of the business and are intended to produce good long-term results. Factors like economic moat, trends in consumption, conservative valuation, etc.

For example, Berkshire purchased Apple (AAPL) between 2016 and 2018, at an average price of $35 per share (P/E ratio of 12 or 13), and it was years before that paid off. The Redditors buy during those years, before the payoff.

Berkshire doesn't have to be right about every stock pick as long as the average is good. But if you buy 100% of the Berkshire picks that go down and less than 100% of the picks that go up (because some never drop below the level they bought them for), there is a real risk that you could do substantially worse

Buffett makes huge new investments very, very rarely. Three in the last 5 years.

Apple: buying began in 2016.

The 5 major Japanese trading houses (the sogo sosha -- Itochu, etc.): buying began in early 2019.

Verizon: buying began in late 2020.

They all trade at or near Berkshire's price, if not far below, and you get one new idea every few years.

There are other new purchases (Chevron, Kroger, AbbVie, Aon, RH, etc.), but these are small, lower-confidence positions that are often sold as soon as the price rises far enough. Probably Weschler and Combs, not Buffett.

At this point why are you not just buying BRK-B?

We do that, too. For example, one of those Redditors owns 22,612 BRK.B shares and has been buying since late 2002.

Berkshire spent $25 billion in 2020 (all of its operating earnings) on buybacks at an average price of $205 per BRK.B share. That buying continued at almost the same pace in 2021 and the average price paid is $220 per BRK.B share.

We can't buy at that buyback price today, but many of us would gladly pay, say, $250 per share for BRK.B.

Yeah, but what kind of fool would sell BRK.B at $220 in 2021, when you can sell it for more on the stock market?

Cool - didn't know about that!

But, yes Shameless Cloning Can Lead to Financial Success :)

I actually wrote about it here: https://playingfordoubles.substack.com/p/shameless-cloning-c...

It's a little hard to take you seriously when you seem to dedicate the first 4 paragraphs to dunking on Microsoft. Windows is no more of a Mac clone than MacOS is a Xerox PARC clone. Word is just a rich text editor, same as Excel is database software and Bing is a search engine. Call it whatever you like, but people all-too-soon forget that the root of all software development is "I wonder if I could do this better?"

dunking on them? seriously?

I literally had one line where I made a joking comment and then applauded their ability to clone and adapt.

you may assuming cloning is a bad thing.

Username checks out.

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