Master Achievement

Warren Buffett announced the largest acquisition in the history of his holding company, Berkshire Hathaway. The Oracle agreed to buy the remaining shares – he already owned more than 22% – of railroad Burlington Northern Santa Fe (BNI) for $34 billion. The deal values Burlington at $100 a share, or 31% above yesterday’s close of $76.07.

 

Buffett is arguably America’s most-admired and most-followed investor consistently named as one of the world’s richest people.  Managed by Buffett, Berkshire Hathaway has a compounded return of 23% over the last 40 years.  Berkshire Hathaway (BRK.A) Class A shares are the highest priced stock shares trading on the New York Stock Exchange.  Recently, the shares have been trading around $100,000 per share.  What if you could purchase Berkshire shares at a 15% discount to their actual market value?

 

One of Warren Buffett’s favorite sayings about the market is: “be greedy when others are fearful and fearful when others are greedy”.  When others are fearful, you can often times buy a stock at a discount or below its market value.  That is exactly what you get when you purchase shares of Denali Fund (DNY).  This is a closed-end fund that owns $22.7 million of BRK Class A shares.  More impressively, Denali Fund is currently trading at a 15% discount to it’s NAV.  Denali Fund is currently trading at $13.30 per share but is valued at $15.66 per share.  Berkshire Hathaway is 25% of the total fund holdings so you are literally buying Berkshire and Buffett at a 15% discount. 

 

But it gets even better.  Denali Fund is focused on both income and long-term capital appreciation.  The other 75% of Denali holdings include dividend paying equities and preferred stock holdings.  The Denali Fund pays a monthly dividend of $0.195 per share for a an annual yield of 17.59%.  This is a higher yield than Buffett receives on his Goldman Saks preferred shares of 10% he received for his $5 billion investment in late 2008.

 

If you want to own Berkshire without forking over $100,000 per share, then Denali Fund is your best bet.  The monthly dividends just sweeten the pot and let you compound your wealth by reinvesting in more shares of Denali Fund.  Buffett is known as an advocate of compounding returns to increase the value of Berkshire Hathaway stock.