Mess with Warren Buffett and Berkshire Hathaway (BRK-A) and you’re sure to start a fight. In his latest piece at TheStreet.com, money manager and columnist Doug Kass asks “Is This the End Of Warren Buffett”? He notes that the market value of 6 major Berkshire holdings is down some $16 billion, and he suggests that Berkshire is thus overvalued based on a sum-of-the-parts analysis. It may be that Buffett’s “salad days” are over, says Kass.
But if anything, we think Buffett’s stature has only grown with the collapse. Sure, his stock portfolio has taken a vicious beating along with the rest of the market. But for one thing, his philosophy has always been to buy companies that are worth owning — that would be worth owning even if they just shut the stock market down for a few years.
More importantly, however, Buffett deserves credit for what hasn’t happened. See, over the years lots of folks have talked a conservative game, bragging about their safety and their ability to avoid Wall Street BS. One by one, they’ve been exposed by the collapse. Look at boring-old State Street. Or consider Bruce Bent’s Reserve Fund — the buck breaking money market fund that lit a flame under powder keg.
The story is always the same: They spent years and years prudently building up their value… and then one day it vanishes in a puff of smoke.
One thing we know is that Buffett actually meant what he said. The tide went out and he actually was wearing swim trunks, and nowhere along the way did he sip the intoxicating Wall Street elixir that he railed against. Again, that’s not to say he Berkshire Hathaway won’t decline as long as the market does. And it certainly doesn’t mean that Buffett’s successor will have the same discipline as “The Oracle” — but if anything, we think, the downturn has bolstered Buffett’s legacy and proven that he was, actually, telling the truth all this time. As his career winds down, it’s not a bad way to go out.
Disclosure: The author owns a single Berkshire B share.