SRH Total Return Fund (STEW): A Bargain Door to Berkshire Hathaway?

This little-known $1.6 billion fund trades at a 23% discount while holding 41% of its portfolio in Warren Buffett’s Berkshire Hathaway. But is this deep value play too good to be true? Let’s break down the numbers, management strategy, and hidden risks.

The chart shows a steady upward trend in STEW’s price over the past year, with the following key points:

Starting price on March 26, 2024: $14.19
Ending price on March 26, 2025: $17.18
Overall price increase: $2.99 (21.1% gain)

What Makes STEW Unique?

SRH Total Return Fund (STEW) operates like a “best-of” portfolio managed by financial professionals with direct ties to Berkshire Hathaway. Here’s what stands out:

Berkshire Concentration: 41% of assets in Berkshire stock (compared to 0% in S&P 500 index funds)
Deep Discount: Shares trade at $16.84 vs. $21.85 net asset value (-23% gap)
Value Metrics: P/E ratio of 2.98 vs. S&P 500’s 25.7
Income Stream: 3.92% dividend yield with 15% payout ratio

Key Metrics at a Glance

Metric	STEW	S&P 500
P/E Ratio	2.98	25.7
Dividend Yield	3.92%	1.35%
5-Year Beta	0.92	1.0
Top Holding	41% BRK.B	7% AAPL

Data as of March 2025¹ ⁴ ⁶

The Berkshire Connection: Smart Money or Overexposure?

Management Ties to Omaha

Portfolio managers Joel Looney (24 years experience) and Jacob Hemmer (CFA) have structured the fund with three Warren Buffett principles:

Concentrated Positions: 75% in top 10 holdings
Cash Reserves: 5% cash buffer for market dips
Value Focus: Seeks stocks trading below intrinsic value² ⁴

This approach helped STEW match the S&P 500’s 20% returns over the past year despite its conservative tilt³.

Why So Much Berkshire?

Built-In Diversification: Berkshire itself holds 60+ subsidiaries
Cash Safety Net: Berkshire’s $157 billion cash pile acts as a market crash cushion
Succession Planning: STEW managers believe Berkshire’s next leadership will maintain strategy³ ⁷

The Discount Dilemma: Bargain or Trap?

Why STEW Trades Below Value

Closed-End Structure: Unlike ETFs, CEFs can’t create new shares to meet demand
Low Volume: 71k daily shares traded vs. 4M for SPY ETF
Perception Issues: 2022 name change from “Boulder Growth” created brand confusion³ ⁷

Historical Discount/Premium

Year	Average Discount
2021	-18%
2023	-21%
2025	-23%

YCharts data¹ ⁶

Answering Investor FAQs

Is STEW’s Low P/E Ratio a Mirage?

The 2.98 P/E seems unbelievable next to the market average. This comes from:

Accounting Rules: CEFs report investment gains as earnings
Realized Losses: Tax harvesting of losing positions⁶
Verdict: Not directly comparable to operating companies’ P/Es

Can the 23% Discount Last Forever?

Three scenarios could close the gap:

Activist Investor: Forces share buybacks
Conversion to ETF: Eliminates discount mechanism
Berkshire Rally: BRK.B gains make STEW too cheap to ignore³ ⁴

Dividend Safety Check

Year	Dividend Per Share	Payout Ratio
2022	$0.48	12%
2024	$0.66	15%

Wisesheets data⁶
With dividends using just 15% of earnings, payments look sustainable barring market crash.

Risks You Can’t Ignore

Board Age Factor:
- Average director age: 69 years
- Longest-serving member: 88 years old⁵
  Why It Matters: Potential succession issues
Liquidity Crunch:
- 5% daily volume = $3.2 million
- Large investors might move prices¹ ⁷
Berkshire’s Cash Hoard:
- $157 billion in cash = 22% of BRK.B’s value
- Could limit upside if markets rise³

How Professionals Use STEW

Berkshire Proxy: Cheaper than buying BRK.B directly (0.77x price)
Portfolio Stabilizer: 0.92 beta vs. market’s 1.0¹
Tax Efficiency: Managed distributions vs. ETF capital gains

The Verdict: Who Should Consider STEW?

Good Fit For:

Berkshire fans wanting discounted exposure
Income investors needing 4% yield
Market skeptics wanting cash buffers

Poor Fit For:

Hands-off index investors
Growth seekers wanting tech stocks
Traders needing daily liquidity

Current Price Alert: At $16.84, STEW trades near its 52-week low of $14.19. Historical data shows the discount typically peaks before narrowing¹ ⁶.

Final Thought

This fund isn’t for everyone, but value-focused investors might find STEW’s combination of Berkshire exposure, deep discount, and income potential worth the liquidity trade-off. As with any concentrated investment, position sizing matters – most analysts suggest capping exposure at 5% of a portfolio³ ⁷.

Disclosure: This analysis uses publicly available data and doesn’t constitute investment advice. Always conduct your own research or consult a financial advisor.

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