No less wise than Warren Buffett, the “Oracle of Omaha,” frequently asserts that investors can make life easier by remembering one key rule: never bet against America.
It is an appealing warning for its simplicity, its patriotic connotation and, judging by the continued success of its author, its precision.
But if the rule is don’t bet against America, the question becomes “OK, so how do you bet against America?”
The answer, according to real-money columnist Stephen “Sarge” Guilfoyle, is just as simple: own Berkshire Hathaway stock. (BRK.A) – Get the Berkshire Hathaway Inc. Class A report. or (BRK.B) – Get the Berkshire Hathaway Inc. Class B Report..
“I’ve been following BRK.B for months now because not only do I tend to root for the home team like you, I’ve noticed that BRK.A and BRK.B haven’t gone through the same correction/bear market than the rest of the broader market did in early 2022,” Guilfoyle wrote:. “Berkshire, led by the brilliant pair of Warren Buffett and Charlie Munger, has been busy lately.”
The conglomerate recently acquired insurer Allegheny (Yes) – Get the Alleghany Corporation report for $11.6 billion in cash, adding to Berkshire’s portfolio of insurance companies – Gen Re and GEICO.
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The dynamic duo have also been busy adding shares of companies such as Occidental Petroleum (OXY) – Get the Occidental Petroleum Corporation report to its existing position and taking a new stake in HP Inc. (HPQ) – Get the HP Inc. report.
Berkshire’s cash levels remain high and are very impressive. As of December 31, the company had net cash of $146.72 billion.
The company’s balance sheet is also remarkable with a current ratio of 4.05, “which is not only healthy, it is healthy on a scale and scope difficult to imagine,” Guilfoyle wrote.
“Frankly speaking, this review passes the Sarge test with flying colors,” he wrote.
One thing investors should note is that the giant’s “B” shares “came out of an ascending triangle with a pivot of $325,” Guilfoyle wrote.
“Based on this pivot of $325, I set a target price of $390 for my own position,” he wrote. “Readers should be aware that a period of basic consolidation where the stock moves sideways after its recent run would be constructive and not, in my view, negative.”