Ackman’s stake in Berkshire, disclosed in August, is a bullish bet. His idea is simple: Growth at Berkshire’s underlying businesses and the company’s competitive position will boost earnings even if the funds aren’t deployed. Rolfe, whose firm had been a Berkshire investor for decades, grew tired of waiting.
“He has missed this glorious bull market,” said Rolfe, chief investment officer of Wedgewood Partners Inc. His company, which oversees $2.2 billion, trimmed its Berkshire stake in the second quarter and exited completely in the third. “The bullish thesis that this massive amount of cash is going to come to bear incredible fruit — hasn’t.”
Berkshire’s third-quarter results, set to be released Saturday, should give investors a sense of how Buffett is handling the “Niagara” of cash generation in a period with no major acquisitions to ramp up growth.
Berkshire stock climbed 4.2 per cent through the end of October, short of the 21 per cent price gain in the S&P 500.
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