This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

When Buffett Retires, Berkshire Hathaway Should Comfort Shareholders

NEW YORK (TheStreet) -- It's another rewarding year for those who own shares of Berkshire Hathaway (BRK.B - Get Report). For the year to date shares (either Class A or Class B) are up about 8%. From the Feb. 5, 2014, low of $108.12 to last Friday's high of $127.57 the Class B stock had surged almost 18%!

It's amazing to realize if an investor had purchased 10 of the Class A shares when Buffett took control of the company 50 years ago they'd be worth nearly $1.9 million today. Yet, I'm beginning to wonder if the company's best days are behind it.

The driving force propelling the phenomenal success of the company is what I call "The Buffett Factor." Berkshire's Chairman and CEO earned the kind of investor confidence that meets or exceeds the late Steve Jobs and Microsoft's Bill Gates.

Buffett "eats his own cooking" when it comes to owning shares of his massive holding company. As of the date of his last SEC filing (April 14, 2014) he owned 350,000 Class A shares of Berkshire Hathaway and 3,770,934 Class B shares. The Class A shares are worth many billions of dollars and the Class B shares are valued at about $480 million.

A number of analysts, me included, believe that when the 83-year old "Oracle of Omaha" retires, confidence in the company's future and the value of its stock will take a sizable downturn. Unless, that is, there are incentives for shareholders to hold tight.

On Saturday Warren Buffett hosts his company's annual shareholder meeting. If he announces his retirement  -- or even a succession plan -- there's one powerful way he can put a safety net under both classes of Berkshire shares.

First, let's look at how the Class B shares have performed by seeing a 10-year price chart including the trailing 12-month (TTM) EBITDA earnings and revenue per share.

BRK.B ChartBRK.B data by YCharts


Despite the crash of 2008 to March 2009 shareholders would be up over 110% for the 10 year period, nearly double the performance of the S&P 500 during the same period.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BRK.A $205,344.00 0.00%
BRK.B $135.74 0.00%
AAPL $113.29 0.00%
FB $91.01 0.00%
GOOG $630.38 0.00%

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs