Author: Patrick Larkin
Covestor model: All Cap Value
Disclosure: Long Berkshire Hathaway
June was another unspectacular month for my All-Cap Value portfolio. The stock market has been driven by macro and political events.
I remain confident that the companies in the portfolio will exhibit strong operating performance in the medium to long-run, and that the value of the portfolio will move up to reflect that performance.
The portfolio remains almost fully invested in stocks. In June I added to the portfolio's position in Berkshire Hathaway (BRK-B), and it is now my largest holding at almost 20% of the portfolio. A 20% holding in Berkshire is not nearly as risky as an equally large holding in most other stocks would be.
Berkshire itself is highly diversified, with very substantial holdings in insurance, utilities, rail transport, chemicals, housing-related industries, and high quality marketable securities.
At current levels, I believe that Berkshire is undervalued. Here are some resources on Berkshire's valuation:
- Whitney Tilson's T2 Partners valuation assessment (5/5/12) which found Berkshire 'a growing, 67-cent dollar'
- John Kish's Berkshire Intrinsivaluator, which finds Berkshire's stock price reflects just 64% of its current intrinsic value
- Carla Fried in Bloomberg: Buffett’s Biggest Bargain May Be Berkshire Hathaway (5/2/12)