Who would you put your money on, everyman billionaire Warren Buffett or an MBA student?
S. Raj Rajagopal, the MBA student in question, laid out his case for shorting the Oracle — or rather Baby Berkshires — in a guest post over on Greenbackd. To be fair, Mr. Rajagopal has spent some time in finance according to his resume.
His presentation on why he thinks you should bet against Berkshire Hathaway makes for lively — if a bit overwrought — reading. It boomerangs from high-brow literary references, including a passage from Shelley’s Ozmandias — Look on my works, ye Mighty, and despair! — to clunky puns: “The buffet is cold, stale and ending (pun intended!)”
Many of the chinks in Berkshire’s armor that Rajagopal highlights, we’ve heard before. They include the fact that Buffett has broken some of his own rules recently, including splitting Baby Berkshires to help pay for Burlington Northern Santa Fe. That in turn led Baby Berks to be added to the S&P 500, which doesn’t exactly fit with Buffett’s long cherished ideals that Berkshire shareholders should consider themselves long-term owners. And of course, there’s the ever-present succession issue.
The analysis might be light, and hardly based on valuation, but it’s always great to hear from a cantankerous contrarian on an object of market veneration, which Buffett unquestionably is. That’s why we can’t help but think that Buffett would appreciate Rajagopal’s independent streak.