Does the Big Short’s Michael Burry Know Something Wall Street Doesn’t? The Famed Investor No Longer Views Berkshire Hathaway as an “Attractive Investment”
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Does the Big Short’s Michael Burry Know Something Wall Street Doesn’t? The Famed Investor No Longer Views Berkshire Hathaway as an “Attractive Investment”
010 mins
Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) has generated market-crushing returns for roughly six decades.
Investors attribute the superior performance largely to its longtime former chief executive officer, Warren Buffett, who stepped down from the role at the end of last year. The loss of Buffett seemed to remove some of the premium that investors paid for Berkshire’s stock, which has underperformed the broader market this year.
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While Buffett handpicked new CEO Greg Abel to lead the company, the market hasn’t been completely sold. However, Berkshire’s stock has bounced back during the past month, up 4.6% (as of Aug. 11), as Abel has begun to deploy some of Berkshire’s huge cash pile.
Still, this hasn’t convinced The Big Short‘s Michael Burry, who recently said on Substack that he no longer finds Berkshire to be “an attractive investment.” Does Burry know something that Wall Street doesn’t?
Image source: Getty Images.
Concerns about the long-term strategy
It’s not a surprise that Abel will have nearly impossible shoes to fill as Buffett’s successor. Warren Buffett became an icon in the stock market for his investing prowess, so that would be true for anyone stepping into the role.
One issue investors have had in recent years is Berkshire’s towering cash pile, which reached almost $400 billion at the end of the first quarter.
Although Buffett has expressed concern about speculation and frothiness in the market in recent years, investors have surely been hoping that Berkshire could make more productive use of the staggering amount of cash the company has been sitting on.
Abel has started to do this. Abel has significantly increased Berkshire’s equity position in Alphabet, which is now a top-five holding in the portfolio.
Berkshire also announced the acquisition of Taylor Morrison Homes in the second quarter for $6.8 billion, and repurchased roughly $4.5 billion of its own stock, more than the company had repurchased in either 2024 or 2025.
Furthermore, Berkshire was a net buyer of stocks in the second quarter, breaking a 14-quarter streak of net selling. Still, Burry has concerns that Abel may not take the same approach as Buffett.
“My biggest fear for Berkshire Hathaway was that when Warren finally stepped down, the successor would be too old and otherwise not Warren, so would not have his patience for the fat pitch,” Burry wrote on Substack. “I believe this fear has come true. I do not find Berkshire an attractive investment going forward. I realize not too much of the cash pile has been spent, and the cash pile remains large. However, these first steps look to be more framing moves than investment moves.”
By “fat pitch,” Burry is using to a baseball term that refers to a pitch right down the middle of home plate, which looks like it is perfect to hit. Buffett made this term famous in his investing philosophy by likening the “fat pitch” to an obvious, low-risk opportunity that the market is mispricing.
While I am just speculating, it’s quite possible that Burry is not pleased with Abel’s decision to invest so heavily in Alphabet, a company that, along with other major artificial intelligence (AI) players, he’s been critical of, particularly some of its accounting practices regarding how it estimates the useful life of equipment.
Damned if you do, damned if you don’t
Burry is considered one of the brightest investors around, so perhaps he’s right. But it also seems as if he’s being a bit harsh toward Abel.
Although Buffett wasn’t penalized by the market for carrying nearly $400 billion of cash without paying a dividend, the market may not have the same patience for Abel, so the new CEO is damned if he puts cash to work and damned if he doesn’t.
It’s true that Alphabet is beholden to the AI trade and will likely see its stock suffer if AI suffers a significant setback. However, there are worse AI stocks to invest in, and Alphabet probably can weather a crash better than most AI stocks.
Furthermore, sitting on the sidelines while AI booms is easier said than done. Sure, investors who manage to avoid a crash will certainly be rewarded. But they can also be punished if they avoid AI and it goes on to generate gigantic returns.
Berkshire probably isn’t going to be a real growth stock again, but it still could serve as a good hedge in the portfolio, especially if the market falters. The stock will generate solid long-term returns through the entire economic cycle.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Berkshire Hathaway. The Motley Fool has a disclosure policy.
