Why Warren Buffet's Recent RH Stock Purchase Makes Sense
Of all the stock purchases Warren Buffett made last year in Berkshire Hathaway's (NYSE: BRK-B)(NYSE: BRK-A) portfolio, arguably most confounding was his third-quarter buy of roughly 1.2 million shares of home-furnishings retailer RH (NYSE: RH). As fellow Fool Sean Williams argued earlier this week, RH, the mid-cap consumer discretionary stock formerly known as Restoration Hardware, doesn't seem to fit Berkshire's usual mold of buying and holding the world's biggest-name brands with staggering reach and superior moats.
To be fair, Berkshire's position is worth "just" $256 million as of this writing -- around 6.5% of RH's shares outstanding but also less than 0.2% of Berkshire's mammoth $250 billion equity portfolio. So noting that Buffett generally involves himself only with the portfolio's most consequential multibillion-dollar moves, the Oracle of Omaha might not have made this purchase himself, delegating the decision to one of his investing lieutenants Todd Combs or Ted Weschler.
Even so, after mulling it over, I think Berkshire's RH stake makes more sense than you might think for a couple of reasons.
Source Fool.com
