Berkshire Vs. T. Rowe Price: Divergent Management Styles

Apart from its billion dollar probe in United Health, Berkshire Hathaway made sizable cuts in holdings of financials. After all, the United Health probe is over-shadowed in this $258 billion portfolio. There were sizable reductions in Bank America and Davita along with Capital One Financial. 

Buffett has concentrated and long held financials like American Express for several decades. It is now 15% of portfolio asset value, exceeded only by Apple. Capital One Financial was also cut back. So the issue is how prolonged is the cutback in financials likely to be. Keep in mind that there are sizable capital gains taxes involved in any cutback of Amex. 

Top 3 positions: Apple, American Express and Coca-Cola comprises over 50% of assets. No other sizable fund do I know where concentration is anywhere comparable to Buffett's imprint. 

Deep-seated issue here is whether the country’s business school teachings on diversification of assets is an overblown, conservative cop-out. Think of trillions of assets managed by our leading banks like JP Morgan. 

Banks in wealth management,  adhere to the 60/40 ratio for their clients. I took a 5% position in American Express same time as Buffett, several decades ago, but I sold out for a tidy profit after a couple of years. I think Warren has made more money than I, but he is finally cutting back sizable positions in financials, a notable change. 

Look at the T Rowe Price portfolio and you see how such a well heeled institution handles huge sums of capital. Some $882 trillion. So many zeros after their name!  What I like is top 5 positions comprise over 25% of assets. Namely Microsoft, Nvidia, Apple, Amazon and Meta Platforms. This is a great endorsement of tech house viability. I’ve big positions in Amazon and Apple. Sold Microsoft foolishly premature. 

Tesla is just under a 1% position. So is United Health. Clearly some wise managers working here-in. They’ll stay in business for at least another 100 years.

These 2 managers showed divergent static ratios. There was nearly total turnover at T. Rowe Price while Berkshire showed a static ratio of 58%. 

For a trillion dollar fund I find the turnover ratio at T. Rowe Price incredibly high., No new positions taken.  Just adds and subtracts, massive, within the portfolio. Why make brokers rich or richer?

High turnover for me is normally a sign of weakness. I’ll cite Renaissance Technologies here. Once again, there’s total turnover of assets in the quarter. I would automatically disregard such an operator. This ain’t investing. It’s minute-by-minute tracking, arbitraging one sector of assets against another. They own Apple, Nvidia and Netflix, but not enough to make a difference in performance. The fund had a good quarter, managing $75 billion.