Warren Buffett’s fans
Legendary investor Warren Buffett has a lot of fans. As we noted previously, Buffett has beaten the markets handsomely over the last 50 years. However, the outperformance has narrowed over the last decade. In this part, we’ll discuss some of Buffett’s picks that didn’t play out as expected.
Berkshire Hathaway (BRK-B) invested in General Electric’s (GE) preferred shares at the height of the financial crisis in October 2008. The company exited the investment last year. While Berkshire Hathaway managed to make some gains on the investment, it looks like a disappointment based on the timing of the investment. The timing was ripe to pick quality stocks at an attractive valuation. Goldman Sachs (GS), which Buffett bought the same year, delivered much better returns.
IBM (IBM) was another stock that didn’t play out the way Buffett might have wanted. Berkshire Hathaway invested in IBM in 2011. The company completely exited the stock last year. From Berkshire Hathaway’s perspective, while investing in IBM was probably a mistake, exiting the stock wasn’t a mistake. IBM has fallen below the levels where Buffett exited his stake. General Electric has also fallen below the levels where Buffett exited the company.
While Buffett invested in some stocks that didn’t deliver strong returns, he also missed out on some attractive investment opportunities like Amazon (AMZN).