Porter Stansberry, the founder of Stansberry Digest published an article about Warren Buffet as the best portrait of an American businessman. Buffet’s Berkshire Hathaway has made a lot of money for quite a long time, and as usual, the United States of America adores winners. Further, Buffet has converted his ordinary and plain personality into an invincible public trademark, which cannot be soiled. Buffet is a good investor, and but even more excellent at public relations; which is why nobody noticed that Berkshire Hathaway is poorly managed.
The brilliance, structure, and strategies that formed the free enterprise’s perfect business have been lost, forgotten, and abandoned. And to make things worse, Warren Buffet directed the company in becoming an enormous dragnet, a dilemma that made it lost its competitive edge against S&P 500 and that will in due time, cause the company to be bankrupt.
However, the core of Berkshire Hathaway is still sound, for it still possess a portfolio of the best international insurance companies. Nonetheless, this superb collection of assets is being plagued by a succession of unsuccessful investments, an issue which shareholders know nothing about.
These outcomes, together with Buffet’s determinations to conceal them must lead the company’s investors to ask him to quit as Berkshire Hathaway’s Chief Operating Officer. Berkshire must be divided between its fully owned industrial firms and its insurance companies, where majority of the former should be put up for sale. Not taking the previously mentioned steps will lead S&P 500 ahead of Berkshire Hathaway.
To comprehend what actually went wrong with Berkshire Hathaway, Stansberry Research’s Porter Stansberry said that it is essential to know how things came to be as they are. For many years, Berkshire implemented a straightforward but extremely dominant investment procedure, which saw the company to primarily purchase insurance companies that are property and casual (P&C) in nature. Now as long as the insurance companies are able to collect premium to pay the claims, Warren Buffet has more than “free” adequate funds to invest; while other insurance companies have to repay capital or gradually withhold it from earnings.
Unfortunately, majority of the investment made by Buffet over the years did not have the anticipated returns that were earlier forecasted or anticipated, putting Berkshire in financial peril.