Is Berkshire Hathaway (BRK) a Sell?!
Here's a headline you don't read in the Journal every day: "Sell Buffett's Berkshire Hathaway?" In his Marketbeat Q&A, reporter Matt Phillips gets down to brass tacks with equity analyst Meyer Shields of Stifel Nicolaus, who slapped BRK with a big SELL sign recently.
The reasons why are fascinating and more complex than you'd imagine. I don't want to spoil the WSJ read, which is pithy and worth checking out, but it amounts to a short-term sell rating. According to Shields, Warren's company has temporarily benefited from recent developments - like the inclusion of BRK in the S&P 500, which triggered a temporary buying bump. The company also stands to lose a bit of value due to some short-put options activity that puts the firm on the hook for certain payouts.
Fundamentally, though, Shields notes that, as the U.S. economy's spending goes, so goes Berkshire Hathaway. The article summarizes the economic bad news like so: "Berkshire’s more exposed to homebuilding and less exposed to technology than the overall economy, but the bottom line is that if unemployment stays high, spending stays low, both for the U.S. in general and Berkshire in particular."
What's your take on ole Warren? Is his company that much of a bellwether for the economy at large? Given how reluctantly analysts usually are in issuing SELL ratings, however justified they may be, does BRK deserve one?
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