Warren Buffett bought an approximate stake of US$565 million in Barrick Gold(TSX:ABX)(NYSE:ABX) in Q2 2020. As the Berkshire Hathaway’s 13F filing revealed, he had exited the gold position altogether by the end of 2020.
We remembered that Buffett bought Barrick Gold, but not so about him selling it off in such a short space of time. Looking at the Barrick chart, his entry price was probably $27-28 and it looks like he sold it for a slight loss from $28 down to $24. It would be like $20+ million loss at least but that is chump change to him. In retrospect, he bought it to hedge his investments. Had he kept Barrick to this day, it would be worth US$385 million , a US$180m paper loss !
You would have thought that Buffett being the legendary Time in Market investor would be keeping his goldies for good. The reality is that Buffett is not necessarily the long term investor everyone thought he is. He invests in a number of companies which represented good value but he is not one sheepish to sell when he thinks its fundamentals no longer stacks up...and because of the sheer amount of money Berkshire has, he only needs to make two to three great calls that make 10 folds or more over time and that's all there is to it, it does not mean he does not have his share of lemons.
Buffett sold out all his Wells Fargo share in Q1 this year and since then it has been on the decline, but he bought them in 1990. You can see from the chart that he made about 20-25x (ex div) over the course of 32 years. That's certainly a very long time but he knew when to call it quits at the appropriate time. You must know when to sell as when to buy. Most of us only know when to buy (when everyone else is) and when people have started selling, they want to be Buffett investor then perhaps chicken out when prices continue to fall until they cannot take it anymore. We think that as investors, we must keep the shares long term. But Buffett will sell anytime he does not see the stock generating the value that he had hoped for. And this is what most of us failed on that front. We continue to back the dead horse until the funeral day. And if we don't know how to be like him, then I guess the least we can do is not let those accrued gains walk away from us, especially if the company in question is not even making cashflow yet.
Then there is the other thing I said here before- there aren't that many ASX stocks that stand the test of time to keep generating and maintain shareholder value, and if there are, they probably will get taken over when they are still in growth stage and yet to reach full maturity. So we can't ever be as long term as we want to. CBA, BHP, CSL, RIO, FMG, we have a few for sure but you can't make 2 bagger with them now over the next 10 years. But with most others, either they get taken over or acquired or they self implode with poor management. Now even long term investing is not as simple as set and forget. Oh No ! Not At All!
