BJM's private clients benefit from Buffet's stellar performance

BARNARD Jacob Mellets Global Value Investment Plan returned 39.1% over the last year on the back of a stellar performance from the underlying investment in Berkshire Hathaway.

"Our fund holds approximately 95% of its equity in Berkshire stock offshore, and the remainder in cash, locally. As a result, our clients have directly received the benefits of the strong performance from Berkshire Hathaway over the last year as well as benefiting from a weaker rand," says Jan Van Staden, CEO of BJM Private Client Services.

For the year ending 1 March 2007, Berkshires share price growth in dollars has been approximately 22% compared with the 9% return of the S&P 500 over the same period.

According to van Staden, Berkshire commenced the year by completing three acquisitions. In addition to these major takeovers, Berkshires subsidiaries engaged in minor acquisitions over the period. Under Buffets guidance the fund has grown at an annual compounded rate of 21.4% over the last 42 years in comparison to the S&P 500 which has only delivered an 11% annual return over the same period. Buffets net worth of $44 billion makes him the second-wealthiest private individual in the world after Bill Gates. Unlike Gates and other billionaires he amassed most of his fortune through stock market investments and about 95 percent of his wealth consists of his holding in Berkshire Hathaway.

Questions therefore have to be asked about Buffet's successor. "Although the "Oracle of Omaha" will leave behind a mass of knowledge and lessons for generations to follow, the fact is that he will leave," says Van Staden. However van Staden says that Buffet has announced to the public in this annual report that the Board has selected three candidates, from whom one will be chosen to take over from him as Chairman when and if the need arises and provides assurances of their suitability and competence.

Van Staden says it is extremely difficult for South African investors to participate in this unique and extremely successful fund. "Currently one share in Berkshire Hathaway costs $108 000 so even by utilising their offshore allowance, South Africans as individuals would find it difficult to buy into the company," says Van Staden. However BJM Private Client Services offers South African investors a unique opportunity to invest in Berkshire Hathaway through the Global Value Investment Fund which buys shares directly into Berkshire Hathaways listed A shares. Moreover, as BJM utilises its foreign investment allowance to take the funds offshore, South African investors can invest in the product without drawing on their R2 million foreign investment allowance.

"Berkshire Hathaway continues to hold a high level of cash, around US$43.7bn, which places the fund in a defensive position should there be a major market correction this year. At the same time the offshore diversification protects South African investors from a possibly weaker rand," says Van Staden. Clients wanting to access this solid long term investment opportunity can buy shares in the Global Value Investment plan at a minimum subscription price of R100 000. The shares trade on a monthly basis and are sold on a secondary market from willing sellers to willing buyers.