Few people have ever dared to question investment decisions that one of America’s top investors has made over the years, but Porter Stansberry of Stansberry Research says Warren Buffet appears headed down the wrong track with two companies Berkshire Hathaway owns. Buffet first made it big by buying the shares of the National Indemnity insurance company and started using the profits from its “float” to invest in other companies. The way Buffet and Berkshire Hathaway gained profits was making profitable but low-risk safe stock investments and buying companies that weren’t expensive and knew how to manage their capital assets well. But over the years this started to change.
Stansberry noted first how Buffet started moving more of his portfolio into banking and other high-capital companies like GM and Delta Airlines. Even his regular stocks in the IT company Apple are not performing like they used to. But the most damning investments have been in Berkshire Hathaway Energy and the Burlington Northern Santa Fe railroad company. These two companies require enormous capital supply from Berkshire Hathaway but bring next to nothing in returns for the company. While it cannot be made clear why Buffet left his original investing strategy from companies whose huge earnings made their way into Berkshire Hathaway’s accounts to companies that bring back little while sucking in huge amounts of capital, Berkshire Hathaway shareholders should be concerned about the company not beating the S&P 500 index the way it used to.
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