Warren Buffett's letter: Investing lessons for India investors today

INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Legendary investor Warren Buffett's annual letter to Hathaway Berkshire's shareholders will be released today after 6.30 pm
(IST). The letter may hold cues for domestic stock investors, whose behaviour is often dictated by fear of missing out (FOMO)
It may also offer interesting insights into value investing, cues on the interest rate scenario globally and outlook for the US technology
stocks, which have been seeing a neck-break rally for last several months
However, there may not be any announcement from the Saint of Omaha on his possible successor
Buffett-owned Berkshire Hathaway's cash pile was last counted at $128 billion
The American conglomerate has largely failed to make use of it for any major acquisition or other initiatives over the past couple of years
due to what Buffett calls "dearth of reasonable investment opportunities"
Rajeev Thakkar, CIO at PPFAS Mutual Fund, says Berkshire's case is a bit different from ordinary stock investors. Thakkar says the company
needs to keep some cash reserves, as its general insurance business can any day be exposed to risk from an odd Hurricane or any other
calamity, causing great losses. That said, he recalled Buffett's last year's annual letter where the billionaire himself noted that
valuations for acquisitions had gone up sharply because of competition from private equity players and, thus, he was instead deploying money
in listed stocks. "Last year, Buffett was a big buyer of Apple shares
For him, listed stocks were more attractive
He had also said whether one participates in equity market at any given valuation is dependent on whether interest rates globally stay low
(which is positive for stocks)
He had no answer to the question, then
It would be interesting to know his thoughts on these points," Thakkar said. Taking Berkshire's lack of big acquisitions as an example,
Gaurav Sud of Kanav Capital Advisors said investors should consider an investment only if he or she thinks the intrinsic value of the
investment is higher than the prevailing price. "In India, the list of popular trades such as IRCTC is long
Investors want to own these stocks at any given valuation
At present, momentum investing is dominating everything else
That is largely driven by FOMO
Whether it is PMS, institutions or retail investors, everyone is chasing a few stocks irrespective of valuations," Sud said. IRCTC shares
have rallied over 500 per cent in last four months since its listing. For last 40 years, Buffett has written an open letter to shareholders
every year
The investing world across the globe awaits for these letters as they provide insights on how the legendary investor and his team think
about an investment strategy, ownership of a stock or sector or various global market triggers. Buffett in his last letter spoke about
four-five big technology companies, FAANG companies, in two paragraphs
He had noted that it was a never-before position where IT firms had a very low capital requirement, kept on growing profit and enjoyed a
monopoly position
Some updates on IT stocks would be keenly followed, Thakkar said. Data showed Berkshire sold 3.7 million shares of Apple in December quarter
The company still holds around $72 billion worth of shares in the company. "In his case, the stock almost tripled
Berkshire started buying the stock at $100-115 and at the current level it would have grown close to three times
Valuations have become expensive and the smartphone market has become saturated," Thakkar said
US stocks hit record high levels this past week
Back home, benchmark equity indices Sensex and Nifty are also not far away from their January peaks. Sud said if an asset class has
outperformed dramatically in a given year, then this whole concept of mean reversion comes in
"Those who have been in the market for long tend to sell a part of their outperforming assets to rebalance their portfolios." "These days it
becomes quite confusing to figure out what Buffett is doing and what Berkshire Hathaway is doing
Even in Apple the first purchase was by one of his deputies," Thakkar said. At 89, the Oracle of Omaha is still young
Thakkar and Sud believe the announcement of a new CEO for Berkshire could be announced on a later date
They believe the company may avoid it as in the past David Sokol, long considered as Buffett successor, quit the company because of a case
pertaining to insider trading in Lubrizol