Warren Buffett’s favourite holding period is forever. His company might make a good candidate…
The post Why Scott Phillips says he will never sell this international share appeared first on The Motley Fool Australia. –
The Motley Fool Australia’s chief investment officer, Scott Phillips names Berkshire Hathaway as an international share he plans to never sell
Berkshire’s valuable portfolio of investments will remain long after Buffett leaves the picture
With nearly US$150 billion in cash, Berkshire Hathaway has plenty of future buffer
Investing for the long haul can be one of the greatest ways to take advantage of compounding. For some investors, this might mean holding onto a share indefinitely, with no plans to sell. Such is the case for one international share that The Motley Fool Australia’s chief investment officer, Scott Phillips, says he intends to hold forever.
It takes a special type of company to find a place as a potential ‘forever’ investment in any portfolio. Firstly, it needs to be a business with a proven track record of performance. Secondly, it needs the resources to weather the inevitable storms over the decades. Both of these factors allow shareholders to sleep well at night while holding for a long time.
With that being said, let’s pop the hood on this international stock that Phillips has tucked away for the long term.
The international company making a home in Phillips’ portfolio is Berkshire Hathaway Inc (NYSE: BRK.B). This multinational conglomerate has proven its ability to outperform the market time and time again over the years, with the great Warren Buffett at the helm.
For those unaware, Berkshire Hathaway wholly owns numerous businesses — including GEICO and Duracell. In addition, the Nebraska-based conglomerate holds a host of investments on its balance sheets. These include substantial stakes in Apple Inc (NASDAQ: AAPL), 可口可乐公司 (NYSE: KO), 美国银行 (NYSE: BAC), and American Express Company (NYSE: AXP).
This diversity provides a level of de-risking from individual industries. On top of that, Berkshire Hathaway is incredibly profitable. In the past financial year, the conglomerate made US$86 billion in earnings on US$268.7 billion of revenue.
The elephant in the room is what happens to Berkshire Hathaway (and its share price) when the legendary Buffett departs. Addressing the potential risk to this international stock, Phillips said:
Buffett will not be there at some point. Whether from natural causes or he chooses to leave the business, someone will take over. And yes, the share price might even be volatile when it happens. Buffett is a great asset, but when he leaves the scene, one way or the other, the business is going to retain all those shareholdings and all those operating businesses.
Furthermore, the conglomerate has plenty of financial ammo up its sleeve to navigate the future. At the end of September 2021, Berkshire Hathaway had US$149.2 billion worth of cash and cash equivalents on its balance sheet.
The Berkshire Hathaway share price closed at just over US$321 overnight on the New York Stock Exchange. Just 20 years ago in January 2002, it was trading at about $50.
Berkshire Hathaway as part of a portfolio
Phillips reveals Berkshire Hathaway as one of his ‘forever’ stocks during a podcast with National Australia Bank Ltd (ASX: NAB) director of self-managed super and investor behaviour, Gemma Dale. In this chat, Phillips describes the US conglomerate as having a ‘bedrock’ position in conjunction with other share investments.
Stepping away from international shares, the investment officer also named 5 ASX shares that look appealing this year.
The post Why Scott Phillips says he will never sell this international share appeared first on The Motley Fool Australia.
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American Express is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Mitchell Lawler owns Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Apple and Berkshire Hathaway (B shares). The Motley Fool Australia’s chief investment officer, Scott Phillips holds shares in Berkshire Hathaway Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.