Whitney Tilson has long been a big investor in Berkshire Hathaway, which dropped 4.6% in March.
In his latest investors letter, Tilson explains why he’s sticking with Buffett and why David Sokol doesn’t matter (via Marketfolly):
Berkshire dropped 2% on the last day of the month due to the resignation of David Sokol, who had been widely believed to be Warren Buffett’s heir apparent. We were surprised and disappointed by the news for two reasons: 1) We think Sokol is a first-rate executive who’s done an excellent job managing MidAmerican Energy, Johns Manville and NetJets; and 2) We share the concerns expressed by many others about the troubling appearance of his stock trades in Lubrizol.
That said, as investors in Berkshire Hathaway, what we really care about is the company’s intrinsic value, which we think remains intact. Buffett is at the top of his game and is in excellent health, so we think it’s highly likely that he will continue to run Berkshire for at least the next five years, if not the next 10. Thus, the resignation of a potential successor at this point is almost irrelevant. In any case, the company has a deep bench of seasoned managers. The media frenzy around Sokol will soon pass and investors will then refocus on what really matters: the $1 billion per month (and growing) that is pouring into Omaha for Buffett and Munger to allocate.
Tilson calls himself a value investor, so ditching Buffett would be close to blasphemy.
In a recent presentation, Tilson set a $170,000 target for Berkshire-A shares, compared to a March close price of $125,300.
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