Key insights
- The author argues Berkshire Hathaway is a value trap under Greg Abel's leadership due to his investment decisions and failure to understand the AI-driven market. They claim traditional value investing is outdated, pointing to a decoupling of equity indices from job openings post-ChatGPT, suggesting a structural economic shift that old-school investors are missing. This could lead to underperformance for Berkshire and similar value-focused firms.
I am serious about this post, not joking here.
Greg Abel has 2 main issues:
- He clearly doesn’t understand how value investing works and did things Warren Buffet would never do: such as buying airline companies, selling a position just after a little over a year of ownership (unless fundamental thesis breakdown - I agree unh sucks but their thesis hasn’t changed since they bought it), selling STZ and Dominos makes no sense to me, and he’s been reported to make frequent visits to subsidiary business units and trying to contribute - this destroys the decentralized business structure that made Berkshire such a high quality compounder. 2. He is an old timer that missed the world by a mile - just like a list of other “super investors” that underperformed massively since chatgpt came along. And I’m talking terry smith, bill ackman etc. I will leave buffet about if this one because he had a successor and sitting on cash yielding 5% was smart. But for the other old timers, these people’s only exposure to tech is via a mag 7 name such as AAPL, MSFT, META because they don’t know any better and are afraid to get left out. And none of these old timers understand the current AI cycle and what the hell is going on with the AI build out and where demand is headed towards. They still stick to their “comfort zone” of “cheap” cashflow hoping the market will revert to fundamentals while fomo forces them to pick a mag7 just to keep up. But they are just wrong in just about anything else. Reminds me of most value trap chasers here in this sub.
I want to draw the attention to one phenomenon , the equity index’s correlation with number of job openings has been debased since the launch of chatgpt - this means that there is something structurally different underneath the K shaped economy. And old timers are too complacent to learn about the new world and will fail to keep up. And you have young guys such as Situational Awareness fund absolutely making a killing as they did the research and understand the future better than these old timers.
Anyways I am gonna sell my 40k worth of Berkshire next week as I think the new ceo sucks and will buy more of the AI data center value chain.