Since the Olaha Oracle announced its retirement, it seems that the market began to touch withdrawal. For some, this is not more or less than the gradual purification of the so -called “buffet cousin.”
Since the emblematic investor Warren Buffett announced his plans to pass the post of the direction of his legendary Berkshire Hathaway (BH) background at the beginning of May, BH’s shares have fallen more than 10%. For some, this is not more or less than the gradual purification of the call “Buffett Prima”. Known in the world as the “Oracle of Omaha”, Buffett always tried to lower the decibels of the “Day D”that is, from his withdrawal from the driving of BH, noting that the actions would go up once he left the position he held since the ’60s. However, until now, none of that has happened since Since its announcement, the BH fund yield has been about 15 percentage points below the Wall Street reference index, S&P500.
For YUN LICNBC chain analyst and specialized in buffett and its financial holding, the liquidation of positions in BH partly reflects the so -called buffet premium, or the additional price that investors are willing to pay due to the unique history of the billionaire and its exceptional capital allocation skills. According to Li, the Finance Professor of the University of Maryland and BH shareholder for a long time, David KassHe acknowledged that he was really surprised by the magnitude of Berkshire’s low performance, especially because Buffett will not leave his position as executive director until December 31. “This relative fall could reach up to 20% in the coming weeks, since some shareholders could be discouraged by the recent behavior of Berkshire prices”he said.
It is worth remembering that Buffett declared that he decided Greg Abelto continue with the culture of Berkshire, which Buffett built with such meticulousness.
The fall of shares and the “Buffett Prima”
Li explains that Part of the low performance of the shares could be attributed to the fall in Berkshire’s profits in the first quarter: operational profits, which include insurance and railways, exclusive property of the conglomerate, fell by 14%, to US $ 9,640 million, during the first quarter of the year. According to Li, Kevin HealBH analyst at Argus Research, agreed with the reading that the falls of the first days after the announcement were definitely related to Buffet’s premium, but it was also thought that it was strongly related to algorithms. “The subsequent falls, I think, were due to the underlying assets, both public and private”he added. For its part, Meyer ShieldsBerkshire analyst in Keefe, Bruyette & Woods, said his approximate estimate is that There is still a buffet premium between 5% and 10% in the shares, which reflects the confidence of some investors that he will still be there as president. Kass said there could be an additional fall in the actions after Buffett is going to the end of the year.
In the eyes of the market, Berkshire is falling from a historical maximum achieved last May 2, one day before its last annual meeting. Today the company still has a market value superior to the billion dollars.
The end of an era for the financial world
It should be remembered that Buffett’s announcement was the news of the global financial world when during the annual shareholders board of Berkshire Hathaway, the 94 -year -old investor millionaire said he was going to leave his position as CEO at the end of this year. The unexpected announcement, even for some council members, brand The end of an era for one of the most emblematic conglomerates in the United States. His successor will be Greg Abel, current vice president of the company’s non -insurance operations, a 62 -year -old Canadian and with a 25 -year trajectory in Berkshire after joining the group in the year 2000, after the acquisition of Midamerican Energy, where he assumed the General Directorate in 2008.
One of the last movements that caught the attention of the market was to apparent construction of a secret position in actions to which regulators have granted a special treatment to maintain the new bet in secret, according to a regulatory document. This confidentiality was key to Berkshire, since it contains volatility until the purchase ends. The last time Berkshire maintained the confidentiality of a purchase was when he invested in Chubb last year. It happens that due to the large size of the Berkshire shares portfolio, which recently amounted to about US $ 275,000 million in shares, any bet would normally have to amount to billions of dollars to have an effect on the returns, and that could easily take months to build, analysts explain.
Source: Ambito
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