In a follow-up to yesterday's "End of Buffett" post, "conservative short seller" Doug Kass of Seabreeze Partners writes today on TheStreet.com that he's not trying to "overly dramatize" Warren Buffett's short-term problems. And he says he didn't intend to "understate" Buffett's "remarkable long-term investment achievements."
But in today's post, "Buffett's Strategy Is Stale", Kass says:
"It was my intention to underscore that the strategy of investing in companies that have apparent moats to protect their business -- and these moats have been so dear to Buffett's investment strategy over multiple decades -- could either:
- have been abandoned by the Oracle of Omaha, owing to his reluctance to alter/sell off his strategic and principal holdings and maintain a tax-efficient portfolio approach; or
- have been influenced by his mistaken analysis of the changing competitive landscape facing some of his portfolio companies (in other words, the moat has been flooded!)."
He cites American Express as an example, estimating that while Buffett "has doubled his money in American Express over a 28-year period, the compounded annual return was an unimpressive 2%."
Kass does acknowledge that Buffett's "record of value creation is unprecedented" and that he is one of the very richest people in the world.
Despite those "past successes" and the "vocal opponents to my view," Kass writes that he stands by his conclusions that Buffett has "lost some of his groove" and his "salad days are over."
And he stands by his prediction that "in the fullness of time, Berkshire's common shares might suffer the same fate of many other listed closed-end equity mutual funds; its shares could gradually trade at a discount to its investment value per share—plus some multiple to pretax profits."
Kass certainly isn't intimidated by Buffett's patient, and fervent, fans. He's planning a trip for the first weekend of May. "Berkshire's upcoming annual meeting will be interesting. I think I will go to Omaha and attend it."
Current Berkshire stock prices:
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