Berkshire Hathaway (BRK)

Re: Berkshire Hathaway (BRK)

Postby millionairemind » Wed Feb 18, 2009 9:14 am

Feb 18, 2009
Buffett sheds J&J stake
NEW YORK - BILLIONAIRE investor Warren Buffett's company sold more than half of its stake in Johnson & Johnson in the last three months of 2008.


Berkshire Hathaway filed documents with the Securities and Exchange Commission late Tuesday that provide a snapshot of its holdings at the end of 2008.

Berkshire revealed several other changes in its holdings, including:

# Sold about 4 million shares of the nation's third-largest oil company, ConocoPhillips, reducing its holdings to 79.9 million shares from 84 million.
... more
Among the most obvious changes was the shedding of about 33.1 million shares of the New Brunswick, New Jersey, drug and medical products maker as it reshuffled parts of its US$69.89 billion (S$107 billion) portfolio.

Buffett also sold about 9 per cent, or about 9.5 million shares, of consumer products giant Procter & Gamble. Berkshire still holds at least 96.3 million shares of the Cincinnati company.

Omaha, Nebraska-based Berkshire also sold its entire stake in Anheuser-Busch. The St. Louis-based brewer was bought by Belgium's InBev in November. Berkshire Hathaway held 13.7 million shares of the brewer on Sep 30.

Berkshire officials do not typically comment on the company's stock investments beyond what they are legally required to disclose, and spokeswoman Carrie Kizer said no one was immediately available to discuss the filing on Tuesday.

The filing does not differentiate between investments Berkshire makes, investments any of its more than 60 subsidiaries make, or investments Buffett himself makes as chairman and chief executive. -- AP
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Re: Berkshire Hathaway (BRK)

Postby millionairemind » Wed Feb 18, 2009 4:23 pm

A portfolio tracker on CNBC for those interested.

http://www.cnbc.com/id/29242870/page/2/
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

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Re: Berkshire Hathaway (BRK)

Postby iam802 » Sat Feb 28, 2009 9:46 pm

Berkshire Profit Falls 96% as Buffett Writes Down Derivatives

http://www.bloomberg.com/apps/news?pid= ... refer=home

By Erik Holm

Feb. 28 (Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc. posted a fifth-straight profit drop, the longest streak of quarterly declines in at least 17 years, on the falling value of holdings including derivative bets.

Fourth-quarter net income fell 96 percent to $117 million, or about $76 a share, from $2.95 billion, or $1,904 a share, in the same period a year earlier. The figures were derived by subtracting results for the first nine months from full-year numbers posted today on the Web site of the Omaha, Nebraska- based company.

Berkshire, where Buffett serves as chairman, chief executive officer and head of investing, suffered as the benchmark Standard & Poor’s 500 Index turned in its worst year since 1937. Liabilities widened on derivative bets linked to world equity markets, though the contracts don’t require Berkshire to pay out until at least 2019, if at all.

“This is an abnormal time,” said Tom Russo, a partner at Gardner Russo & Gardner, in an interview before the earnings were released. The derivatives, Russo said, “are pegged to a market that’s declining, so you’re going to see some losses on those.”

Berkshire shares have fallen 44 percent in the past year as the value of the firm’s top stock holdings dropped and losses increased on the derivatives. Nineteen of the top 20 stocks in Berkshire’s U.S. portfolio, valued at $51.9 billion as of Dec. 31, declined last year. Coca-Cola Co., Berkshire’s top holding, dropped 26 percent. American Express Co. plunged 64 percent. Oil producer ConocoPhillips fell 41 percent.

Derivative Bets

Berkshire’s derivative contracts were sold to undisclosed buyers for $4.85 billion as of Sept. 30. Under the agreements, Berkshire must pay out if, on specific dates starting in 2019, four market indexes are below the point where they were when he made the agreements. Buffett, recognized as one of the world’s pre-eminent investors, gets to use the money in the interim.

The worldwide recession and global contraction of the credit markets is giving Buffett, 78, opportunities to invest some of the firm’s cash hoard, which was worth more than $30 billion on Sept. 30.

Berkshire agreed in the past six months to purchase preferred shares of General Electric Co. and Goldman Sachs Group Inc., and made deals to buy debt in firms including motorcycle- maker Harley-Davidson Inc., luxury jeweler Tiffany & Co. and Sealed Air Corp., the maker of Bubble Wrap shipping products.

Berkshire is commanding yields as high as 15 percent at a time when potential rivals are no longer able to make such investments.

Money at Work

“He’s been able to put a lot to work,” said Russo, who’s largest holding is Berkshire stock.

The derivatives are tied to four stock indexes -- the S&P and three others -- that would all have to fall to zero for Berkshire to be liable for the entire amount at risk, which Buffett pegged at $35.5 billion in November. The liabilities on the derivatives are accounting losses that reflect the falling value of the stock indexes, not cash Berkshire has paid out.

Buffett built Berkshire over the past four decades with dozens of acquisitions, buying companies that make candy, sell ice cream and lease corporate jets. The firm typically gets about half its profit from insurance operations, which Buffett has said are attractive because they offer a similar business model to the derivative agreements, allowing him to invest policyholder premiums until the money is needed to pay claims.

Declining investments and falling property and casualty rates caused fourth-quarter profit declines or losses at 21 of the 22 companies in the KBW Insurance Index that reported results so far.



Ok, may not be as bad as it seems. At least, the company has until 2019... not sure if Warren will still be around to handle the situation. Hopefully, all those being groom now..will know how to manage such derivatives.
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Re: Berkshire Hathaway (BRK)

Postby kennynah » Sun Mar 01, 2009 4:17 pm

wah....he sold such far dated options ah.... i guess...maybe he sold SPX 2019 150 Put 8-)
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Re: Berkshire Hathaway (BRK)

Postby millionairemind » Mon Mar 09, 2009 2:57 pm

http://www.cnbc.com/id/29515672
Mar.04
5:57 PM ET
Wednesday, 4 Mar 2009
Berkshire Hathaway Credit Default Swaps Rise to "Junk" Territory - Bloomberg

The price of Berkshire Hathaway credit-default swaps hit a record high today (Wednesday), going as high as 535 basis points, before retreating to 515 basis points in the late afternoon.

Bloomberg reports the swaps, which are in effect insurance against a default by Warren Buffett's holding company, are trading at levels "more typical of junk-rated companies" even though Berkshire retains its triple-A rating.


The news service says the swap prices may be rising due to worries Berkshire will lose big on derivatives contracts tied to the long-term moves of global equity indexes, high-yield corporate bonds and municipal debt.

Bloomberg quotes Buffett author Jeff Matthews as saying, "There are two extremes on Berkshire, and one is that he’s going to make a lot of money on these things, just like he’s promised." The other extreme: "He could in fact suffer huge losses and it could really trigger some problems."

As part of a lengthy section on derivatives in this year's annual letter to shareholders, Buffett wrote that his expectation, "though it is far from a sure thing, is that we will do better than break even" on the contracts.

Buffett has said Berkshire will not have to pay out any money on the contracts until well into the future, even if they lose value on paper in the meantime.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

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Re: Berkshire Hathaway (BRK)

Postby iam802 » Fri Mar 13, 2009 8:55 am

all the cuts coming out on Berkshire now...
----

Buffett’s Berkshire Has AAA Debt Rating Cut by Fitch

http://www.bloomberg.com/apps/news?pid= ... refer=home

March 12 (Bloomberg) -- Billionaire Warren Buffett’s Berkshire Hathaway Inc. had its top-level AAA credit rating cut by Fitch Ratings, which cited concern about the potential for losses in the insurer’s equity and derivatives holdings.

Buffett’s role as chief investment officer also puts the company at risk if he becomes unable to do the job, Fitch said in a statement. Fitch cut the so-called issuer default rating on Berkshire to AA+, and senior unsecured debt to AA. The insurance and reinsurance units kept their AAA status, with a negative outlook for all entities, Fitch said.

“Fitch views this risk as unrelated to Mr. Buffett’s age, but rather Fitch’s belief that Berkshire’s record of outstanding long-term investment results and the company’s ability to identify and purchase attractive operating companies is intimately tied to Mr. Buffett,” Fitch said. Buffett is 78.

Berkshire joins General Electric Co., which was downgraded by Standard & Poor’s today and lost its status as one of the remaining AAA financial companies in the U.S. The action follows a 35 percent drop in Berkshire’s stock in 12 months triggered by concern that Buffett’s bets on derivatives -- which he has called “financial weapons of mass destruction” -- will crush profit at the firm.

Berkshire has outperformed the S&P 500 Index in 38 of the 44 years Buffett has run the firm and handled its investments, according to the Omaha, Nebraska-based company’s 2008 annual report. The company is backing derivatives pegged to corporate junk bonds, municipal debt and the performance of stock indexes on three continents, with liability of more than $14 billion as of Dec. 31.

More Derivatives

Buffett said in an e-mail in November that collateral calls from the institutions on the opposite side of his derivative bets are “under any circumstances, very minor.” In a Bloomberg Television interview conducted last week, Buffett said he plans to sell more derivative contracts, which he personally negotiates. Some investors have said the derivatives may saddle the insurer with billions of dollars in losses.

“Oh, we’ll continue,” Buffett said. “We do anything that I think I understand and where I think that the odds strongly favor making money, which doesn’t mean you make money every time.”

The $37.1 billion in equity puts tied to four of the world’s stock markets -- the largest portion of the derivative contracts -- have “no collateral posting requirements with respect to changes in either the fair value or intrinsic value of the contracts and/or a downgrade of Berkshire’s credit rating,” according to the company’s latest annual report, released this month.

Who’s AAA?

Insurers depend on high credit ratings to keep down the cost of raising capital and reassure policy holders that their claims will be covered.

“If Berkshire isn’t triple A, I’m not sure which company would be,” Buffett said in a Bloomberg interview at last year’s annual shareholders’ meeting.

1. Always wait for the setup. NO SETUP; NO TRADE

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Re: Berkshire Hathaway (BRK)

Postby millionairemind » Mon May 04, 2009 7:51 am

I was very amused when I read the following story on CNBC this morning.

If the world's greatest value investor thinks that his company's stock price has not reached intrinsic value to warrant a share buyback... are those who buy the shares "idiots" at the current price of $92K?? How about those who bought at $142K??? :roll: :? :shock:

Buffett: No Plans for Berkshire Hathaway Stock Buyback Now
Published: Saturday, 2 May 2009 | 1:04 PM ET
Text Size
By: Alex Crippen
Executive Producer
http://www.cnbc.com/id/30535550
Berkshire Hathaway 2009 Shareholder Meeting

Warren Buffett says there are no plans for a buyback of Berkshire Hathaway stock right now, although he did not rule out the possibility in the future.

He did, however, set a very high bar.

The stock price would have to be "demonstrably below" a conservative estimate of the company's intrinsic value.


That implies Buffett does not think the stock is clearly undervalued at its current level of $92,511 a share. It's down about 30 percent over the last twelve months.
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Re: Berkshire Hathaway (BRK)

Postby winston » Mon May 04, 2009 8:06 am

Buffett upbeat amid turbulence by Ronald Chan and agencies

Billionaire investor Warren Buffett told a record crowd at a somber annual meeting of his Berkshire Hathaway that first-quarter operating profit fell and the company's book value declined 6 percent, as the recession hurt many of the company's businesses and investments.
Operating profit fell about 12 percent from a year earlier to US$1.7 billion (HK$13.26 billion), as most of Berkshire's businesses were "basically down."

Buffett told an estimated 35,000 shareholders gathered in Omaha that he believed inflation would return and affect the whole world, not just the United States.

He rejected the notion that US taxpayers would bear the entire burden of the stimulus package, noting that China could be most affected because inflation would undermine the value of its large holdings of US Treasury bonds.

Ultimately, the bailout would be paid for by a decline in the US dollar's purchasing power, Buffett said. The best hedge against inflation is to retain earning power by being a worker that society needs, the man known as the Sage of Omaha told his audience. Buffett also saw stability approaching for the US housing industry.

"In the last few months you've seen a real pickup in activity although at much lower prices," he said, citing data from Berkshire's real-estate brokerage business, one of the largest in the United States.

"We see something close to stability at these much-reduced prices in the medium to lower part of the market."

The decline in Berkshire's book value results in part from falling stock prices and higher losses on derivatives contracts, and comes on top of a 9.6 percent decline last year, the biggest drop since Buffett began running the company in 1965.

Buffett acknowledged that Berkshire will probably lose money on derivatives tied to the credit quality of junk bonds.

Berkshire's cash stake fell to about US$22.7 billion on March 31 from US$25.5 billion at year end, Buffett said. Berkshire expects to report results on Friday. Buffett expressed confidence in Wells Fargo, one of Berkshire's biggest investments, saying it has "by far the best competitive position" of any large US bank.
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Re: Berkshire Hathaway (BRK)

Postby ucypmas » Mon May 04, 2009 8:40 am

I am not sure if WEB's willingness to do a buyback, and whether an investor should/should not buy BRK at current levels (or whatever levels), should be looked at in the same light.

millionairemind wrote:I was very amused when I read the following story on CNBC this morning.

If the world's greatest value investor thinks that his company's stock price has not reached intrinsic value to warrant a share buyback... are those who buy the shares "idiots" at the current price of $92K?? How about those who bought at $142K??? :roll: :? :shock:
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Re: Berkshire Hathaway (BRK)

Postby millionairemind » Sat May 09, 2009 7:24 pm

May 9, 2009
Berkshire's posts $2b loss

NEW YORK - WARREN Buffett's Berkshire Hathaway Inc posted its first quarterly loss since 2001, hurt by losses on derivative contracts, a big investment in the oil company ConocoPhillips, and the weakening economy.

The net loss for the Omaha, Nebraska-based insurance and investment company was US$1.53 billion (S$2.23 billion), or US$990 per Class A share, and compared with a profit of US$940 million, or US$607, a year earlier.

Analysts on average expected operating profit of US$1,087 per share, according to Reuters Estimates. Revenue fell 9.5 per cent to US$22.78 billion. Book value per Class A share fell 6.1 per cent to US$66,248, following a 9.6 per cent drop in 2008.

Mr Buffett said many of Berkshire's nearly 80 businesses were hurt by the recession and lower consumer spending, including housing-related units that make bricks, insulation and paint.

Berkshire last had a quarterly loss in the third quarter of 2001, because of insurance claims from the Sept. 11 attacks. It called the global credit crisis 'temporary,' but said the company could face 'significant' pressure if it persists.

'Results reflect the overall economy, which Buffett does not expect to recover quickly,' said Michael Yoshikami, president of YCMNET Advisors in Walnut Creek, California, which owns Berkshire shares.

Two credit rating agencies took away Berkshire's 'triple-A' ratings in 2009, including Moody's Investors Service. Berkshire owns 20.4 per cent of Moody's parent, Moody's Corp. -- REUTERS
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

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