facebookShould I buy Berkshire Hathaway Class B stocks or the stocks it holds directly? - Seedly

Anonymous

06 Mar 2021

Stocks

Should I buy Berkshire Hathaway Class B stocks or the stocks it holds directly?

What is the difference and pros and cons of each?

Discussion (2)

What are your thoughts?

Learn how to style your text

One thing they do a lot that most people are unaware is that they use a lot of options. You can see in their financial statements Under derivatives or watch interviews they talked about options. Buffett makes millions each year selling cash secure puts on S&P500 and KO. The risk of selling puts is risk of assignment of those shares but it doesn’t bother him cause he wants to own them anyway, that’s why he always speak so confidently of KO and S&P500.

Stock drops —> gets to buy shares at discount and keep premium

Shares go up —> darn it, don’t get to buy the shares but get to keep the premium

Win-win situation for long term investors who are confident in what they invest in.

Even if say you copy the amount of AAPL or KO or BAC they have in their portfolio, you will lose out because they are getting much more in dividends having bought these shares back in the past. The % allocation is just market value but not number of shares and how much dividends they receive which many of the companies Berkshire invest in do distribute.

Brk.B is not an ETF, it’s a company. It makes much more from just capital gains from stocks they own. Not to mention private business investments and those they own

Are you referring to duplicate all the holdings? won't be able to do that. there are preference shares, private companies, treasury bills which we will not able to fully replicate. furthermore, bershire has so diversified holdings that if the capital is not large enough, still unable to meaningfully diversify.

unless you are saying you want to pick and choose stocks which berkshire already bought. yes, you can do that, but also need time and effort to dyodd. don't just blindly follow what berkshire buys or sells. case in point, lst year berkshire suddenly sold off airline stocks which caught many by surprise.

Write your thoughts