Summary
- A brand moat in the consumer space is difficult to sustain today.
- Berkshire Hathaway still has exposure to some wonderful businesses.
- The $100 billion cash pile is where the true moat lies.
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A recent article by fellow SA author Steven Chen went through Berkshire Hathaway's (BRK.A, BRK.B) portfolio of companies and their respective moats. I enjoyed reading the article, but don't fully agree with some of the conclusion within. For this analysis, I would add some additional thoughts on Berkshire's portfolio of companies in correlation with the piece. In addition, I have some concluding thoughts that investors I believe sometime miss when consider Berkshire as an investment.
Buffett's love for brands is apparent for anybody who follows Berkshire Hathaway. Coca-Cola (KO), Apple (AAPL), Kraft Heinz (KHC), Fruit of the Loom, and Benjamin Moore are a fraction of the portfolio companies with brand power. I see inherent risk, as the portfolio has high exposure to the reliance on brands, but is limited by intrinsic value size.
Today's business ecosystem has changed. A brand moat isn't what it used to be. You may ask why I think that. Well, there was a major pivot two decades ago when the Internet was starting to blossom. The Internet didn't change things overnight. But in the past 4 years, erosion has occurred in some iconic brands.
