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Warren Buffett No Longer ‘at the Top of His Game,’ Slams Billion-Dollar Money Manager

Warren Buffett No Longer ‘at the Top of His Game,’ Slams Billion-Dollar Money Manager
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Warren Buffett, the billionaire ‘Oracle of Omaha,’ has lost his Midas touch, according to David Rolfe – chief investment officer at Wedgewood Partners. Rolfe yanked his firm’s $10 million stake in Buffett’s Berkshire Hathaway after a decade of what he describes as weak investments and missed opportunities. In a note to clients, Rolfe wrote:

“Thumb-sucking has not cut the Heinz mustard during the Great Bull Market. The Great Bull could have been one helluva an astounding career denouement for Messrs. Buffett and Munger.”

Warren Buffett couldn’t beat the stock market

Buffett’s Berkshire Hathaway has trailed the S&P 500 over the last decade. In other words, Buffett would have made more money if he’d put funds straight into an index fund.

Rolfe, whose firm oversees $1.2 billion, was dismayed at Buffett’s controversial decision to invest in Kraft Heinz, an investment Buffett admitted he overpaid for. Rolfe also slammed Buffett’s “missed opportunities” including Visa and Mastercard which rallied more than 1,000% each in the historic bull run. They should have been “layups” for Berkshire which only had a small allocation.

Warren Buffett’s Berkshire Hathaway (dark blue line) has underpormed the S&P 500 (orange line) over the last ten years. And Buffett missed the “layup” investment of Visa (light blue) which rose 1,000%. Source: TradingView

Rolfe’s biggest gripe, however, was Berkshire’s record cash pile. According to recent SEC filings, Buffett’s firm holds $122 billion in cash sitting on the sidelines. Buffett maintains that he’s holding out for an “elephant-sized acquisition” in an over-valued market but Rolfe sees it as a missed opportunity.

“[These decisions] do not inspire confidence that Buffett & Co. are still at the top of their game.”

Is Buffett predicting a stock market crash?

Berkshire Hathaway’s $122 billion cash pile may, however, be a smart play on Buffett’s part. As CCN reported, Buffett’s cash might be a tactical position to hedge against a looming recession.

“Warren Buffett, one of the world’s most successful investors, appears to be battening down the hatches for a stock market crash… The $122 billion cash pile is unusual for Buffett, who typically puts his money to work through acquisitions, stock buybacks or equity purchases.”

By holding such an outsized cash position, Buffett is perhaps reducing his exposure to the over-priced stock market and keeping plenty of liquidity handy to swoop in when stocks crash.

Time for bitcoin?

Buffett could certainly have beaten the market in the last decade had he allocated a small amount to bitcoin. The leading cryptocurrency is the best-performing asset of the last ten years, but the Oracle of Omaha has always rebuffed the investment.

“Bitcoin has no unique value at all. It doesn’t produce anything. You can stare at it all day and no little bitcoins come out. It’s a delusion basically.”

Despite his scorn for cryptocurrencies, his spare cash pile is large enough to buy up two-thirds of all existing bitcoin. Something to think about…

This article was edited by Samburaj Das.

Last modified (UTC): October 15, 2019 09:27

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