The Second Richest Man In The World Can't Get Any Help

Everyone says it pays to be rich. Well how about if you're the second richest man in the world? I guess not, according to this Bloomberg article. Warren Buffett's Berkshire Hathaway Inc. BRK does not have a single buy rating on shares, despite being the cheapest it has been since the stock market lows of March 2009. Based on a price to book value, shares are the cheapest they have been since the "Great Recession" ended, at least for the stock market. Shares are at their lowest levels since June 2010, despite having the legendary investor firmly in charge. Sure there was the messy resignation of Daivd Sokol in March, who left the firm amid a insider trading scandal. Sokol was seen by many as a potential successor for Buffett, 80, when he retired or left the Omaha-based conglomerate. “Hopefully we'll pull out of this, but it looks like it'll be slow,” said Meyer Shields of Stifel Nicolaus in a quote captured by Bloomberg. Shields has a Hold rating, one of four analysts who have such a rating, or an equivalent. According to Yahoo Finance, Berkshire trades at 1.14 times book value. In March of 2009, at the lows of the equity markets, Berkshire traded at 1.04 times book value. Many have called for a succession plan to be made public, despite Buffett having a short list of candidates to replace him should something happen. Aside from Berkshire's vast businesses, which now include Lubrizol, Burlington Northern Santa Fe, Geico, and others, the market does not appear to be giving much, if any recognition to the company's vast equity holdings. The company, thanks in part to Todd Combs, who now runs a part of Berkshire's equity portfolio, the company has added MasterCard MA, so the company was a large beneficiary from yesterday's blowout earnings report. With large stakes in stable firms like Coca-Cola KO, Wells Fargo WFC and others, Berkshire is a much more defensive company than people give it credit for. As such, it is baffling why not one analyst on Wall Street rates it a buy. So why can not Buffett get any love, despite Berkshire being so cheap? More money, more problems, I guess. ACTION ITEMS:

Bullish:
Traders who believe that Berkshire will name a successor to Buffett shortly might want to consider the following trades:

• At less than 1.25 times book value, Berkshire is a screaming buy for longer term investors. It could see meaningful price appreciation if some of the near term concerns are put to ease.

Bearish:
Traders who believe that Buffett will not make his plans known any time soon may consider alternate positions:

• Shorting Buffett has always been a mistake. Despite the low PBV, shares may just sit at these levels for an extended periods of time. Until some kind of succession plan is made known or the potential for another major acquisition, we could see shares stay stagnant for quite a while.
  
  

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