Pieter Slegers — ETF Portfolio Update: An S&P 500 Alternative From Omaha (Compounding Quality)

One-line take: the best single argument in this batch, and it is not the author's own — it is Christopher Bloomstran's, reported from Omaha. Index concentration by itself is not new: the top ten are "nearly 40%" of the S&P 500 against a 140-year average of 24%, but the Nifty Fifty were concentrated too, and in 2000 the top ten still included Walmart, Exxon Mobil and Citigroup, which "had nothing to do with the internet boom." What is different now is correlation, not weight: "8 of the 10 are now related to Artificial Intelligence." The second-order argument is the return arithmetic on the capex: hyperscalers are expected to spend $700bn on AI infrastructure in 2026 alone; a 10% return on that requires $70bn of profit, which at a 10% margin needs $700bn of revenue — against total AI-related revenue of roughly $40bn in 2025. Valuation is the third leg: a Shiller CAPE over 40, "approaching the valuation we saw before the 2000s dot com crash", with Klarman quoted on why the entry price is the risk. The proposed alternative is Berkshire Hathaway, argued on the index's own four selling points — diversification (26 public holdings plus 60+ wholly-owned businesses, from BNSF and GEICO to Dairy Queen and Fruit of the Loom, plus insurance and Berkshire Hathaway Energy), zero management fee against an ETF's expense ratio, winners left to run (Coca-Cola since 1988, See's since 1972), and a better long-run record — plus three things an index cannot offer: businesses "hard for AI to disrupt", more than $300bn of cash to deploy into a crash, and Greg Abel buying back stock he thinks is cheap. The number: Bloomstran values the B shares at $560-580 against a $475 price. The house ETF portfolios are then updated — American CAGR 13.5% ($11,075.21), non-American 18.4% ($12,429.24) — and the month's purchase is a wide-moat top-up on both sides: MOAT for $500 at $100.80, GOAT for €500 at €31.61.

1. Stocks & names mentioned

One company (Berkshire Hathaway), the two ETFs actually transacted, and the American portfolio's holdings. The non-American UCITS holdings and the WisdomTree and Tema funds are listed in the transcript rather than given rows, since their exact listing symbols are not stated in the post. Research legend: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis. Written post with no timestamps — the At link opens the article.

Ticker	Name	Research	View	What he said	At
BRK.B	Berkshire Hathaway	QT · SA · STK · FA	Positive	Proposed as an S&P 500 replacement, and argued on the index's own four merits. Diversification: "ownership in 26 public companies through its stock portfolio… more than 60 private companies that are fully owned" — BNSF, Dairy Queen, Clayton Homes, GEICO, NetJets, Duracell, Fruit of the Loom — plus insurance and Berkshire Hathaway Energy. Cost: "while the fees to own an S&P 500 ETF are very low, there are no management fees to own Berkshire Hathaway stock." Winners run: "his favorite holding period is forever" — Coca-Cola since 1988, See's Candies since 1972. Record: "over the long-term, Berkshire Hathaway has performed significantly better than the S&P 500." Three additional advantages over the index: it is "not one big bet on AI… they own a lot of companies that are hard for AI to disrupt"; more than $300bn of cash "to deploy when attractive opportunities arise"; and capital allocated by Greg Abel, "the man Warren Buffett picked himself", who "thinks Berkshire Hathaway is undervalued, as he started buying back the stock." The valuation: "Christopher Bloomstran estimates Berkshire Hathaway B shares to be worth between $560 and $580 in his most recent letter (current stock price: $475)" — a 18-22% discount.	read ↗
MOAT	VanEck Morningstar Wide Moat ETF	SA · STK	Positive	BOUGHT — $500 at the Monday open, current price $100.80. The rationale is an explicit echo of the AGM: "Warren Buffett always buys companies with moats. We'll add some to our Wide Moat stocks." Currently 11.6% of the American ETF portfolio, and the second-largest cumulative gainer in it: two prior purchases (November 2023 at $73.5 and April 2024 at $85.8) now stand at +38.30% and +18.50%. The same top-up is repeated on 20 August.	read ↗
GOAT.AS	VanEck Morningstar Global Wide Moat UCITS ETF	STK	Positive	BOUGHT — €500 at the Monday open, current price €31.61. The European twin of the MOAT purchase, bought because "if you live outside the US, you can't buy US ETFs." 13.4% of the non-American portfolio; three prior purchases (December 2023 at €23.58, March 2024 at €25.25, March 2025 at €29.50) stand at +35.02%, +26.09% and +7.92%.	read ↗
VB	Vanguard Small-Cap ETF	SA · STK	Neutral	Held, not transacted this month. The largest position in the American ETF portfolio at 21.8%, expressing the "size: the smaller the better" factor. Four purchases between December 2023 and February 2026, now +34.67%, +27.60%, +18.05% and +3.32%.	read ↗
RSP	Invesco S&P 500 Equal Weight ETF	SA · STK	Neutral	Held, not transacted. 17.1% of the American ETF portfolio, and the structural answer to this issue's own complaint about the cap-weighted index — the same 500 companies without the 38.5% top-ten weight. Three purchases (October 2023, May 2024, July 2025) now +44.98%, +24.06% and +10.10%.	read ↗
XMHQ	Invesco S&P MidCap Quality ETF	SA · STK	Neutral	Held, not transacted. 10.7% of the American ETF portfolio, combining the quality and size factors. Two purchases (January and July 2024) now +23.11% and +13.63%.	read ↗
USMV	iShares MSCI USA Min Vol Factor ETF	SA · STK	Neutral	Held, not transacted. The smallest American position at 9.3%, and the weakest performer: two purchases (April 2025 at $90.70 and March 2026 at $91.78) up only +3.85% and +2.63%. The low-volatility factor has lagged badly in a momentum-led market — the same drawdown the 7 May Bloomberg chart documents for quality.	read ↗
MVOL.L	iShares Edge MSCI World Minimum Volatility UCITS ETF	STK	Neutral	Held, not transacted. The non-American minimum-volatility sleeve, and the source of the only loss in either portfolio: the 30 March 2026 purchase at €75.72 is -2.95%. Two earlier purchases (April and August 2025 at ~€62.5) are +17.34% and +17.92%.	read ↗
KO	The Coca-Cola Company	QT · SA · STK · FA	Neutral	Named twice as illustration, not as a pick: as the evidence that Berkshire lets winners run — "Warren Buffett started buying Coca-Cola in 1988" and it "performed exceptionally well" — and as one of the Nifty Fifty names (with IBM, Xerox and Polaroid) showing that 1960s index concentration spanned unrelated industries.	read ↗

Three notes. (1) The section heading is stale — the update is headed "ETF Portfolio Update: April 2026" in a post published on 10 May, the same class of template lag as the "March 2026" performance cards in the 3 May issue. (2) The two portfolios are not comparable as stated. The non-American portfolio's 18.4% CAGR against the American 13.5% is flattered by currency: the transactions are made in euros and the profit and loss columns are converted to dollars, so a weaker dollar over the period shows up as European outperformance. The text half-acknowledges it — "over time, I expect both portfolios to generate similar returns" — without naming the cause. (3) The non-American weight table lists "iShares S&P 500 Equal Weight" twice (20.9% and 14.8%), which is either two share classes or a labelling error in the published pie; the figures are transcribed as shown.

2. Talking points

Concentration is not the problem; correlation is

The setup: the top ten are "nearly 40%" of the index against a 140-year average of 24%, and concentration has "(almost) never been higher."
Bloomstran's refinement is what makes the section worth reading: concentration alone has happened before without disaster. The Nifty Fifty were concentrated across unrelated industries — IBM, Coca-Cola, Xerox, Polaroid. Even in 2000, Walmart, Exxon Mobil and Citigroup "had nothing to do with the internet boom."
The distinction: "8 of the 10 are now related to Artificial Intelligence." A concentrated index of uncorrelated businesses is a different risk from a concentrated index of one bet.

The AI capex return arithmetic

Stated as a chain anyone can check: $700bn of hyperscaler AI infrastructure spending in 2026 → a 10% return needs $70bn of profit → at a 10% margin that needs $700bn of revenue.
Against that: "all AI-related revenue was estimated at only about $40 billion in 2025."
The gap is roughly seventeen-fold. The argument does not claim the revenue will not come — "AI revenue is growing quickly, but it still is very early in the journey" — it claims the required rate of arrival is extraordinary, and that the index is priced as if it is assured.

Valuation, with the entry price framed as the risk

Klarman, quoted from Margin of Safety: "the price you pay for an investment determines its risk. The lower the price, the lower the risk and the higher the potential return." Risk defined as the price paid, not as volatility.
The Shiller CAPE is explained before it is used — ten years of inflation-adjusted earnings, to smooth out single-year distortions — and is over 40, "approaching the valuation we saw before the 2000s dot com crash."
Forward PE is offered as the cross-check, and the JP Morgan starting-valuation-versus-subsequent-returns chart as the mechanism: "based on valuation alone, the future returns of the S&P 500 look much lower than they have been in recent years."

Berkshire argued on the index's own four merits

The structure of the argument is what makes it persuasive: the four reasons people buy the S&P 500 are listed first — diversification, low cost, winners run and losers drop out, and a good long record — and then each is claimed for Berkshire.
Diversification: 26 public holdings plus 60+ wholly-owned businesses, plus insurance and Berkshire Hathaway Energy.
Cost: an index fund charges a small fee; Berkshire charges none at all. That is a genuine structural point rather than a rhetorical one.
Winners run: Coca-Cola since 1988, See's since 1972 — the manual version of what an index does automatically.
Then three things the index cannot do: businesses hard for AI to disrupt (railroads, energy, Clayton Homes), $300bn+ of cash to deploy into a crash, and an allocator who is buying back the stock because he thinks it is cheap.

The one number

"Christopher Bloomstran estimates Berkshire Hathaway B shares to be worth between $560 and $580 in his most recent letter (current stock price: $475)" — an 18-22% discount, sourced to a named third party's published letter rather than asserted.
Corroborated by the buyback: Greg Abel repurchasing is management's own statement about value, on the same logic used for insider buying at KKR.

The house ETF portfolios, marked to market

American: $11,075.21, a 13.5% CAGR. Weights: Vanguard Small-Cap 21.8%, WisdomTree EM Multifactor 19.0%, Invesco S&P 500 Equal Weight 17.1%, VanEck Wide Moat 11.6%, Invesco S&P MidCap Quality 10.7%, Tema Durable Quality 10.4%, iShares MSCI USA Min Vol 9.3%.
Non-American: $12,429.24, an 18.4% CAGR, with only one losing transaction out of nineteen.
The factor tilts are stated: quality, size ("the smaller the better"), multifactor, and a small emerging-markets exposure — none of which is a bet on the AI top ten, which is the point of the issue.
The best individual transaction is the January 2024 iShares Edge MSCI World Multifactor purchase at +69.35%; the worst is the March 2026 minimum-volatility buy at -2.95%.

The purchase, and its consistency

MOAT for $500 at $100.80 and GOAT for €500 at €31.61, at the Monday open — a €500/$500 unit, the same as every prior ETF transaction in both tables.
The reasoning is one line and directly from the AGM: "Warren Buffett always buys companies with moats. We'll add some to our Wide Moat stocks." The same pair is bought again on 20 August.

What is missing

No valuation is given for the ETFs themselves — the equal-weight and small-cap sleeves are the direct expression of the concentration argument, and their multiples relative to the cap-weighted index would have made the case quantitatively rather than by construction.
Berkshire is proposed as an S&P 500 alternative but is not added to either ETF portfolio, and there is no discussion of the obvious counter — that a single stock, however diversified internally, is not an index substitute for someone who owns one fund.

3. In plain English

A jargon-free summary of the thesis behind each argued name. (Renders on each name's consolidated page.)

BRK.B — Berkshire Hathaway Positive

The starting point is a warning about the S&P 500. The ten largest companies are now nearly 40% of it, against a 140-year average of 24% — and, more importantly, eight of those ten are tied to the same thing, artificial intelligence. That has not been true before. In the 1960s the biggest companies were IBM, Coca-Cola, Xerox and Polaroid, which had little to do with each other; even in 2000 the top ten included Walmart, Exxon and Citigroup. So an investor holding an index fund today is far less spread out than they think.

The arithmetic behind the AI spending is the second worry. The big cloud companies are expected to spend $700 billion on AI infrastructure this year. To earn a normal 10% return on that they would need $70 billion of profit, which at typical margins means $700 billion of revenue. All AI revenue in 2025 was about $40 billion. The gap does not prove the spending is wasted, but it shows how much has to go right.

Third, the price. The Shiller ratio — which compares prices to ten years of inflation-adjusted profits, to smooth out one-off years — is above 40, close to where it stood before the dot-com crash.

So the suggestion is Berkshire Hathaway instead, argued on exactly the four things people like about the index. Diversification: it owns stakes in 26 listed companies and outright owns more than 60 businesses, from the BNSF railway and GEICO to Dairy Queen and Duracell, plus a very large insurer and a utility. Cost: an index fund charges a small annual fee; owning Berkshire shares costs nothing at all. Letting winners run: Buffett has held Coca-Cola since 1988 and See's Candies since 1972. And a long-run record better than the index.

Three things it adds that an index cannot. Most of what it owns — railways, power, homebuilding — is hard for AI to disrupt. It holds more than $300 billion in cash, so a crash is an opportunity rather than a loss. And Greg Abel, whom Buffett chose, is buying back the shares, which is management saying they are cheap. The investor Christopher Bloomstran puts the B shares at $560-580 against a market price of $475.

MOAT — VanEck Morningstar Wide Moat ETF Positive

GOAT.AS — VanEck Morningstar Global Wide Moat UCITS ETF Positive

Summary derived from the archived Compounding Quality post (text in transcript.txt) for personal study. Not investment advice. © Compounding Quality / Pieter Slegers for source material.