Opinion: Berkshire investors would do better if the firm was broken up. It’s time for Warren Buffett to step aside. No one today would build a jumble of companies like Berkshire.
It’s time for Warren Buffett, 92, to retire as CEO of Berkshire Hathaway Inc. and let a successor get on with dismantling the world’s largest conglomerate.
Berkshire investors would do better if the firm was broken up, a process Wall Street calls “unlocking shareholder value.”The collective value of Berkshire’s components if the company spun off its hundreds of diverse enterprises would be closer to $800 billion. Canadian Pacific Railway Ltd. and Canadian National Railway Co., both formerly yoked to conglomerates, each outperformed Berkshire’s BNSF Railway last year, increasing their profits while BNSF’s financials weakened.In 2018, Berkshire’s profit plummeted by 91 per cent. In 2020, it fell by 48 per cent.No one today would build a jumble of companies like Berkshire, which came about somewhat by accident.
Meanwhile, Buffett clings to a job that enables him, like Zeus, to cast thunderbolts across the economy with his massive acquisitions and big bets in the stock and derivative markets. And a renowned stock investor who left Berkshire exposed to last year’s stock-market rout is difficult to regard as risk-averse, which Buffett declares himself to be.
Berkshire’s shares would trade a bit lower than their current price if Berkshire hadn’t spent upward of $60 billion buying back its shares over the past two years, inflating their value.
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