Key insights
- The article discusses contrasting investment decisions by Berkshire Hathaway and Bill Ackman regarding GOOG and MSFT. Ackman sold most of his GOOG position to buy MSFT, despite being bullish on GOOG long-term, citing valuation and capital allocation reasons. The author questions Ackman's decision, suggesting it resembles panic selling rather than strategic rebalancing, especially given GOOG's subsequent outperformance. The article has a slightly negative influence due to the questioning of a prominent investor's strategy.
I know most retail investors like to sell green to buy red, and then cry when the green keeps greening and the red keeps redding. I didn’t know even elite investors fall for it.
Bill Ackman on X: “To be clear, our sale of $GOOG was not a bet against the company. We are very bullish long term on Alphabet. But at current valuations and in light of our finite capital base, we used $GOOG as a source of funds for $MSFT”
My investing philosophy aligns with Berkshire's. I would rather double down on the winners I have high conviction in or just let them run.
Bill Ackman did not just trim his high conviction winner, he exited it completely to find a better risk/reward setup. What if $MSFT turns out to be a “value trap”?
He sold in Q1 when both $MSFT and $GOOG were crashing. He likely got a great entry price on $MSFT, but he likely also ended up missing most of $GOOG's melt up in April and post earnings. $MSFT is up ~18% from its March low of $356, while $GOOG is up ~43% from its March low of $273.
Trimming some goog to add some msft makes sense but bailing entirely on a high conviction winner looks an awful lot like panic sell than smart portfolio rebalancing
Selling is easy. Re-entry is hard. Wishing Ackman good luck with buying it back higher