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巴老过去一周动态总结：
Published Sunday March 15, 2009
Warren Watch: Downgrade takes shares of Berkshire down a notch
BY STEVE JORDON
WORLD-HERALD STAFF WRITER While the stock market overall went up Friday for the fourth day in a row, Berkshire Hathaway Inc. shares reversed course after three days of gains. A possible reason was Fitch Rating Service's downgrade by one notch of Berkshire's financial rating, to AA+ from AAA, and its bonds two steps, to AA from AAA. Shrinking list
Berkshire Hathaway Inc. and General Electric Co. lost top-level debt ratings last week on concern about losses on financial instruments. Berkshire, however, retained its AAA status with Standard & Poor's, along with five other companies:
ExxonMobil
Johnson & Johnson
Automatic Data Processing
Microsoft
Pfizer
AAA status has long been a badge of honor for Berkshire, especially as other financial companies have struggled. Chairman Warren Buffett regularly points out that Berkshire's checks are good - shorthand for saying that Berkshire will pay any insurance claim or financial commitment, no matter how large. Ratings indicate how likely a company is to meet its financial obligations, and a higher rating can mean lower interest costs if the company borrows money. The AA+ rating is "among the highest in Fitch's rating universe," according to a report on the rating change. Fitch affirmed its AAA ratings for Berkshire's National Indemnity Co. of Omaha, for Geico and for 13 other insurance companies. Fitch's outlook for Berkshire's rating remained "negative," meaning it may be downgraded further. The negative outlook reflects uncertainty about the financial market's effects on Berkshire, Fitch said, including economic conditions likely to reduce earnings over the next 12 to 18 months. Berkshire's bond downgrade applies to 14 bond issues totaling $10.6 billion. Berkshire continues to be rated AAA by Standard & Poor's and Moody's, which have been in the rating business longer than Fitch but often aren't as tough on ratings. Rating companies have been criticized for not recognizing financial problems sooner. In their report on Berkshire, Fitch's Mark E. Rouck and Gregory Dickerson wrote that they have downgraded many insurance and financial businesses over the past several weeks "in light of the current stressful economic environment." "Fitch believes that 'AAA' ratings are not appropriate at the holding company level for financial-oriented enterprises given significant market volatility and correlation of risks under stress, recently observed throughout the global economy," the report said. Beyond that, the report cited derivative contracts negotiated by Buffett, the risk of future declines in the stocks Berkshire holds and the company's dependence on Buffett as its chief investment officer. (The concern over Buffett is not because of his age - he's 78 - but because "the company's ability to identify and purchase attractive operating companies is intimately tied to Mr. Buffett," the report said.) Derivatives are complex financial instruments which "derive" their value from other assets. While Buffett has criticized derivatives in general, he also negotiated some contracts for Berkshire and said last week that he might do more. "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," he told Bloomberg News, just days before the Fitch issued its report. Despite its doubts about derivatives, Fitch said Berkshire's contracts have favorable features, are "well-managed" and likely are worth more than listed on Berkshire's books. Fitch said Berkshire's exposure to market forces, including its large holdings of company stocks, is "inconsistent with the stability required at the 'AAA' level." Berkshire spreads that risk by owning a variety of companies, the report said, but not enough to keep the AAA rating. The bond rating was downgraded partly because bonds issued by Berkshire would come second to its insurance obligations, a more significant factor "in the current environment," Fitch said. The report endorsed Buffett's "opportunistic investment style" of putting Berkshire's money to work, but it noted the company's lower 2008 net income and the declining value in its stock holdings during the year. Fitch said it received some nonpublic information for Berkshire in its review process but does not meet regularly with Berkshire's management.
Crazy Warren?
The New Yorker's headline: "Is Warren Buffett Crazy?" The answer, James Surowiecki wrote, is probably not. The question applied to Buffett's statement last week that now is "a great time to be in banking." Surowiecki wrote that "there's a chance, at least, that Buffett was right." With the Federal Reserve cutting interest rates for its funds, Surowiecki wrote, banks can make more profit on money they lend. Money costs Wells Fargo Bank just 1.44 percent interest, well below the rate that the bank is charging for loans, and that wide "spread" means profits for banks. Banks have lots of bad assets and are threatened with being taken over by the government, or nationalized, Surowiecki wrote. But he added, "At the very least, though, history suggests that Buffett has not gone around the bend, and that it's a mistake to think that nationalization is the only plausible solution to our current banking crisis."
No raise
Buffett's 2008 salary was his customary $100,000, plus $75,000 in fees for serving on Berkshire-related boards of directors, his annual shareholders' proxy statement showed. Shareholders who meet in Omaha May 2 will be asked to re-elect all 11 Berkshire directors, who serve one-year terms and received between $2,700 and $6,700 last year in fees for attending meetings. Three members of the audit committee received the higher amounts. The statement said Berkshire provided Buffett with $315,709 worth of personal and home security services. In addition, Buffett reimbursed Berkshire $50,000 for using Berkshire personnel and for minor expenses such as postage or phone calls for personal use. Berkshire shareholders also may be asked to vote on a proposal by shareholder Joseph Petrofski of Nevada City, Calif., requesting that Berkshire produce a "sustainability report" showing the impact of the company's operations on the environment. Berkshire said the vote will take place if the proposal is properly presented, but recommended against it, saying that while sustainability is important, a report would be costly and not benefit shareholders.
Looking inward
Buffett visited Switzerland, Germany, Spain and Italy last year to make himself known to business owners who might consider selling to Berkshire. Now, while a purchase in Europe is still possible, he said a domestic deal is more likely. "The way things are going, there's a lot of things that may be happening in the United States," he told Bloomberg News. Buffett has spent down Berkshire's cash hoard from $45 billion a year ago to about $25 billion, and even sold holdings in Johnson & Johnson and ConocoPhillips to keep the company's cash plentiful while making his latest purchases. "Frankly, when we had $45 billion, the threshold wasn't as high for the first deal as it would be subsequently. I'm open for business, but it's got to be the best business in town." He also said sales are off sharply at Berkshire's consumer-oriented businesses. "The change in the American consumer's behavior in the last six months is like nothing that's ever happened," he said. "They won't go in our jewelry stores. They've got the money, but when Valentine's comes along, they think: 'I still love my wife, you know, but I'll just tell her this year.' "
Eyeing Bulgaria
Dnevnik, a business newspaper in Sofia, Bulgaria, reported that a Berkshire division plans to offer loan insurance in Bulgaria.
'The right guy'
Buffett, a supporter of Barack Obama, called the president's messages on the economy "muddled" and opposed some of the positions Obama favors, such as carbon dioxide fees, labor election rules and corporate jets. But during a CNBC interview, Buffett also defended Obama, saying he's "the right guy." Obama is well-spoken, Buffett said, adding: "You need the president of the United States to make it very clear. Because if people aren't clear, they're going to be confused. And if they're going to be confused, they are going to be scared stiff. And that has to end."
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发表于 2009-3-2 19:42:58
楼主
发表于 2009-3-16 20:19:51
发表于 2009-3-2 09:54:19
