When Warren Buffett makes an acquisition on behalf of Berkshire Hathaway, it immediately triggers a hindsight bias reaction that makes you think–oh yes, it was so obvious, how did I not see that coming? The latest news report, covered by the Wall Street Journal, indicates that Warren Buffett is expected to complete the purchase of Precision Castparts for somewhere in the neighborhood of $37 billion.
Some of the commentary about the deal conveyed befuddlement as to why Buffett would be interested in a stock that fell from $275 per share in 2014 to $190 in 2015, and subsequently indicated that Buffett is paying too much by valuing the company in the range of $230 per share. As you can already guess, I regard that commentary as typically short-sighted and ignorant of Precision Castparts’ unusually strong balance sheet and unusually strong earnings per share growth for an industrial.
I always wonder–what … Read the rest of this article!