WEB:The Oracle of Omaha- Warren Buffett
- Whirlwind
- SteveT
- dewam
- mitelo
- Felipe
- JenL_2
- skp
- Kirk
- SteveT
- Sinewave
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» dewam - Re: 8-Year Economic Slump
In response to message posted by mdorsey:Just to clear things up.
Buffett Disputes Article
Warren Buffett dismissed as "silly" an article in the Sept. 3 issue of Business Week magazine that says he expects the U.S. economy will remain in a slump for eight years. "It is a silly story," said Berkshire Hathaway Inc., of which Buffett is chairman and CEO. "Mr. Buffett has never made an eight-week, or an eight-month, let alone an eight-year forecast, and he doesn't plan on doing so." Buffett was reported as predicting the economy will remain in a standstill because of a "hangover effect" of the swift growth in the late 1990s. The report cited an undisclosed "private equity investor who has heard the Sage of Omaha's reasoning." - Bloomberg News
-- posted by dewam
» mitelo - Re: Re: 8-Year Economic Slump
In response to message posted by dewam:The initial story and his recent positions in high yield bonds didn't make sense. I thought something had changed or the old guy was losing it. But, the clarification comments are vintage in candor and humility.
-- posted by mitelo
» Felipe - Re: 8-Year Economic Slump
In response to message posted by dewam:
"Mr. Buffett has never made an eight-week, or an eight-month, let alone an eight-year forecast, and he doesn't plan on doing so."
Dewam, I'm glad you cleared that up. The thought that someone of Buffett's stature had engaged in such silliness simply didn't ring true.
This report brings two additional thoughts to mind. First, we have some folks around here that tell us what the market is likely to do tomorrow, next week, or in October. I'm struck by how infrequently they guess right, but it doesn't stop them from trying to convince us they're prescient--even though they're less reliable than a coin toss. Oh well, I just hope they don't follow their own advice.
Second, and more astounding, is the fathomless frailty of human nature. Imagine Bogle, Buffett and legions of other great minds lined up on one side of an issue, with a few obscure radio talk show hosts and some peculiar Internet "personas" on the other side of an issue. It's utterly astounding--it's beyond astounding--that anyone would knowingly choose to follow someone like a Bob Brinker.
-- posted by Felipe
» JenL_2 - Buffett's REIT sale
This from 8/29 WSJ:Buffett's Sale of Stock Puts Focus on REIT
By JONATHAN WEIL
Warren Buffett, the billionaire investor who says the best time to sell a stock is never, has sold his stake in First Industrial Realty Trust. So should investors follow him out of the stock his wallet made famous?
For most of the past two years, First Industrial, a Chicago real-estate investment trust, has basked in being the stock recommended by Mr. Buffett as part of a December 1999 charity event. The name of the REIT was tucked inside the 20-year-old wallet auctioned by Mr. Buffett, raising $210,000 for Girls Inc. of Omaha, Neb. But First Industrial's days as a Buffett holding are over. "He owns no shares of the stock," a spokeswoman for Mr. Buffett says.
The spokeswoman declines to say when or why Mr. Buffett sold the stake, which he held personally. But the disclosure comes just as First Industrial is receiving scrutiny over the way it calculates the profit measure most widely followed by Wall Street analysts. Michael Brennan, First Industrial's chief executive, Tuesday declined to comment on Mr. Buffett's departure. "I don't comment on specific activity of specific shareholders," says Mr. Brennan, who also adamantly defends the company's financial-reporting practices.
As reported last year, Mr. Buffett bought 1.8 million shares of First Industrial at about $24 each, a 4% stake, for a total of $43 million. As of 4 p.m. in New York Stock Exchange composite trading Tuesday, First Industrial shares closed at $33.23, up eight cents.
Mr. Buffett recommended First Industrial when the tech-stock rally was near its peak. When share prices dropped, many investors fled the sector's red ink -- and reliance on "pro forma" accounting practices to make their results look better -- by rushing into supposedly safe stocks like REITs, which had real assets, steady dividends and healthy-looking profits. What investors may not have realized, however, is that the REIT industry's widely cited earnings benchmark -- "funds from operations," or FFO -- is just as fuzzy as the dot-coms' pro forma metrics.
"For investors that have moved into real-estate stocks for safety, it may not be as safe as it seems," says Lee Schalop, a REIT analyst at Banc of America Securities, who rates First Industrial a "market-performer" and says he isn't recommending it. "Of the 32 companies we cover, First Industrial is the most aggressive" in calculating FFO.
The National Association of Real Estate Investment Trusts defines FFO as net income plus depreciation and amortization expenses. The association excludes, among other things, gains or losses on sales of any properties that previously have been depreciated. The reason depreciation is added back is that real estate generally gains value over time. Gains and losses on sales of depreciated properties are excluded because their owners have declared, by depreciating them, that they are holding them for investment purposes rather than as inventory for resale.
Most REITs follow the guidelines set by the association, to which First Industrial belongs. But the guidelines aren't binding, leading to inconsistent pro forma accounting practices throughout the industry.
Unlike the trade group, First Industrial defines FFO to include net gains from sales of previously depreciated properties. The company doesn't disclose that in its quarterly-earnings news releases -- which have given more prominence to FFO than the REIT's lower net income. But the company does reveal how it computes FFO in separate "supplemental information" booklets for investors and analysts. Michael Havala, First Industrial's chief financial officer, says the company's disclosure practices have been evolving and are "as good as, if not the best in, the industry."
<img src="/files/mysites/jen2/reitbuffet.gif" width=220 height=300 align="left"> First Industrial first reported gains from depreciated-property sales in the first quarter of 2000, and the company began including them in FFO under a line item called "Integrated Industrial Solutions customer sales gain/fees." (First Industrial says gains represent almost the entire line item.) The company recorded $1.2 million in such gains in the first quarter of 2000, or just 3% of its $40.4 million of FFO, according to its supplemental information.
For the six months ended June 30, gains on depreciated-property sales totaled $11.7 million, or 13% of the company's $92.6 million of FFO. Based on the company's guidance, Banc of America's Mr. Schalop notes that analysts project First Industrial will report 2001 FFO of about $190 million, or $4.06 a share. Of that amount, Mr. Schalop estimates 59 cents a share, or nearly 15%, will come from the line item for depreciated-property sales. First Industrial's top executives also benefit from high FFO because FFO is a "primary component" of their bonus and incentive awards, according to the company's proxy.
Messrs. Brennan and Havala say they are aware the company's FFO definition doesn't follow the trade group's guidelines and that gains on sales of investment properties are considered nonoperating items under both generally accepted accounting principles and the association's FFO definition. They say First Industrial includes such gains because it considers them, in effect, recurring inflows of cash. As for the reason the gains on property sales have increased so much this year, they say corporate customers are taking advantage of low interest rates to buy their own buildings rather than lease them.
"Those activities are integral to the company's operations," Mr. Brennan says. For instance, First Industrial frequently contracts to develop custom-built facilities for customers who lease for the first few years and buy later. In those cases, he says, First Industrial is acting more as a developer than a passive investor, even if it is depreciating the property until it is sold.
Another area of investor scrutiny is the way the company has allocated purchase prices within newly acquired real-estate portfolios. For the second quarter of 2000, for instance, its biggest acquisition was a portfolio of 18 properties around Dallas for $44.3 million, or $34 a square foot, which it bought for investment purposes. About nine months later, it sold three of the properties for $12.1 million, or $38.39 a square foot. That produced an unusually large gain. The sale included the two properties in the portfolio with the lowest purchase-price allocations, at $20.17 and $21.55, respectively. That raises questions about whether those outsize FFO gains are sustainable; the average purchase price assigned to the 15 remaining properties is more than $36 a square foot.
The company says they are sustainable. Mr. Havala, the finance chief, says he had hoped to sell the three properties quickly when the company bought them. Mr. Havala says First Industrial didn't have those Dallas-area properties independently appraised, but that the purchase-price allocations were appropriate. He explains that company executives wouldn't intentionally boost FFO at the expense of higher taxes and, thus, reduced cash flow.
Subscribe to WSJ Online @ http://www.wsj.com
....Jen
-- posted by JenL_2
» skp - Buffett Sees Recession 'Deep, Extended'
Thursday October 4 3:20 PM ETBuffett Sees Recession 'Deep, Extended'
NEW YORK (Reuters) - Legendary investor and multibillionaire Warren Buffett (news - web sites) says the United States is in a recession that probably is ``relatively deep and extended.''
Buffett's statement reinforces what many economists consider a foregone conclusion, namely that the U.S. economy is indeed entering a recession, defined as two consecutive quarters of negative growth. The fall-out of the Sept. 11 attacks -- less spending and travel by consumers and businesses alike -- worsened an already weak U.S. economy.
``I'm sure we are in a recession, probably a relatively deep and extended one, but they are part of business life and we are prepared,'' Buffett said in a Sept. 26 memo posted on the Web site of his holding company Berkshire Hathaway Inc.
A Berkshire spokeswoman was not available to elaborate on Thursday.
The bearish comments by Buffett, whose financial prowess has earned him the nickname ``The Oracle of Omaha,'' follow myriad signals of recessionary pressure in the U.S. economy, such as rising unemployment and declining corporate profits.
Buffett noted that Omaha, Nebraska-based Berkshire has estimated $2.2 billion in losses related to the Sept. 11 attacks on the World Trade Center and Pentagon (news - web sites), but said its final insurance exposure is as yet unknown.
``We've labeled this (figure) a 'guess' because that's all it is,'' Buffett said in the statement. ``It will be many years before we can tell the world within a narrow range what the true figure was.''
But Buffett's memo also carried a reassuring tone. While admitting that Berkshire's ``loss is huge,'' Buffett said it is nevertheless ``one Berkshire can easily bear.''
-- posted by skp
» Kirk - FORTUNE Article: Monday, December 10, 2001
http://www.fortune.com/indext.jhtml?chan...Long article but some Key Points:
• Dow Jones Industrial Average
Dec. 31, 1964: 874.12
Dec. 31, 1981: 875.00
• Dow Industrials
Dec. 31, 1981: 875.00
Dec. 31, 1998: 9181.43
• Gain in Gross National Product
1964-1981: 373%
1981-1988: 177%
• Interest Rates, Long-Term Government Bonds
Dec. 31, 1964: 4.20%
Dec. 31, 1981: 13.65%
Dec. 31, 1998: 5.09%
Even so, that is a good-sized drop from when I was talking about the market in 1999. I ventured then that the American public should expect equity returns over the next decade or two (with dividends included and 2% inflation assumed) of perhaps 7%. That was a gross figure, not counting frictional costs, such as commissions and fees. Net, I thought returns might be 6%.
Today stock market "hamburgers," so to speak, are cheaper. The country's economy has grown and stocks are lower, which means that investors are getting more for their money. I would expect now to see long-term returns run somewhat higher, in the neighborhood of 7% after costs. Not bad at all--that is, unless you're still deriving your expectations from the 1990s.
-- posted by Kirk
» SteveT - Re: FORTUNE Article: Monday, December 10, 2001
In response to message posted by Kirk:Kirk, thanks for the link. One thing when they talk about Gains in Gross National Product it should be 1981-1998: 177%. During that time frame didn't they change GNP to GDP? GDP I believe includes exports- importrs and some other minor changes. If they made a apples to apples comparison it could be less than 177%
-- posted by SteveT
» Sinewave - Citigroup
02/14 16:21Buffett's Berkshire Reports Holding No Citigroup (Update1)
By Daniel Goldstein
Washington, Feb. 14 (Bloomberg) -- Billionaire investor Warren Buffett's Berkshire Hathaway Inc. reported holding no Citigroup Inc. shares, according to a regulatory filing.
Buffett had reported holding 7.4 million shares of Citigroup in September. Today's Schedule 13F filing with the Securities and Exchange Commission shows no holdings in Citigroup, the largest financial services firm. A 13F filing is used by institutional investors.
``It means Mr. Buffett thinks he has a better place to put his money,'' said Michael Stead, chief investment officer of the $700 million SIFE Trust Fund, which owns 400,000 Citigroup shares. ``Maybe they believe the stock is overvalued.''
Stead said he didn't intend to reduce holdings of Citigroup in his fund, which owns financial service stocks.
``I don't think there's anything better you could replace it with in the same industry,'' the fund manager said. ``Citigroup is a great company and continues to grow above average in the financial services sector.''
Citigroup shares rose 20 cents to $45.55. The shares have risen 15 percent since Sept. 17, the first trading day after the Sept. 11 terrorist attacks.
-- posted by Sinewave
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