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Buffett was right
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August 16, 1996: 8:33 p.m. ET
Baby Berkshires slip in value, but investors eye long term
From Correspondent Ceci Rodgers
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CHICAGO (CNNfn) - The "Oracle of Omaha" was right.
Three months after the controversial Berkshire Hathaway Class B shares hit the market, investment guru Warren Buffet's status as a market genius was bolstered again as his warnings that the shares were overvalued proved accurate.
The stock hit a low of $990 three weeks ago, a loss of 11 percent. Only in the past few days have the Berkshires returned to their initial public offering of $1,100 a share. The stock dropped 17 to 1,093 Friday.
Franklin Morton, director of research at Ariel Capital Management, said the stock is a long-term bet, more appropriate if an investors is saving for retirement or a child's college education. (356K WAV) or (365K AIF)
The B shares were designed to provide investors with a less expensive way to grab a slice of the Buffett phenomenon, and to discourage knock-off funds trying to piggy-back on Berkshire's success.
Peter Russ, a longtime Buffett fan and financial analyst with Shelby Cullom Davis, bought the B shares for some of his clients, but he told them not to expect a return on their investment until next year.
"This is a company that has matured to a certain degree knowing that you cannot expect 23 or 24 percent rates of return in the future. And while 15 percent is still a healthy rate of return, he didn't want others promising rates of return that could not be made by Berkshire Hathaway," Russ said.
In his treatise to new shareholders, Buffett warned off those who thought the price of the B shares would wiggle around daily. He called investors "co-adventurers" in a life-long investment.
And if history is any judge, waiting will prove to be good advice. Berkshire 'A' shares rank as the best single stock investment over the past 20 years. 
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