Berkshire Hathaway serves as a cash placeholder
The speakers argued that Berkshire Hathaway is a reasonably valued, low-volatility equity that serves as an excellent placeholder for cash or equity mandates during market uncertainty.
The argument
The hosts discussed how Berkshire Hathaway historically outperforms in bear markets and experiences less dramatic drawdowns. They noted that asset managers often use it as a 'wait and see' bucket, and its massive cash pile and potential for share buybacks provide strong downside protection.
The thesis, stress-tested
✓ What validates it
- ✓Outperformance relative to the S&P 500 during a market drawdown
- ✓Deployment of cash into large private market acquisitions
▸ Risks discussed
- ▸Slowing growth due to massive size
- ▸Drag from holding a massive cash balance if no large acquisitions materialize
Hear it yourself
"But then what Toby and I also talked about was that over the next decade at the current middle ages, perhaps one would pick Berkshire because of the downside protection and strong culture."
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