What's the Significance of Berkshire Hathaway (BRK) and Warren Buffett's Investment in USG Corp (USG)?
Buffett has a big stake in USG Corp (USG), but I have some contrarian theories about Buffett:
- There is no information content in a Buffett holding as opposed to a purchase, because he basically won't sell no matter how bad things get. Examples: Moody's (discredited by their mortgage security ratings), Washington Post and Gannett (dying industry), USG Corp (down hugely since most of his purchases, why hold through a housing crash?), General Electric (turned itself into a bank making risky commercial loans)
- These deficits could stem from Buffett's mental models of America (and Goldman Sachs, and the newspaper industry) not recognizing the changes that have occurred since the 1950s.
- Has there ever been a case where Buffett recognized a problem in an industry and sold his holdings or went short?
I think USG breaks Buffett's own rules. Where is the "moat"? - the products are not really differentiated.
2 comments:
He made a brilliant decision to sell Fannie and Freddie common stock, and happened to make a killing on the position.
It only took three years for someone to think of an example. Thanks!
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