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» Kirk - Billionaire Buffett has a bear-y bad feeling
.From http://business.bostonherald.com/busines...
Billionaire Buffett has a bear-y bad feeling
By Brett Arends
Friday, January 21, 2005
Is Warren Buffett still the market seer of legend, or is he just a grumpy old man?
The 74-year old ``Sage of Omaha'' took to the airwaves yesterday to warn that pretty much everything was overpriced and bound to go down.
Biggest dislike: the dollar, thanks to the huge U.S. trade deficit.
``We are force-feeding dollars on the rest of the world at the rate of close to a couple billion dollars a day,'' he said in an interview on cable channel CNBC. ``That's going to weigh on the dollar . . . unless we have a major change in trade policies, I don't see how the dollar avoids going down.''
But, he added, ``I don't know if it's going to be this month, next month or next year.''
Buffett is sitting on a cash pile that swelled to $43 billion last autumn because he cannot find any bargains. That's a record sum for his financial conglomerate Berkshire Hathaway, whose entire market value is $135 billion.
[Kirk's Editor Comment: Interesting. I was not aware that Buffet had 32% of his BRKA market cap in cash! That large cash position mixed with the low beta stock positions of his Berkshire Hathaway holding company would sure explain his market under performance the past two years (see table below) ]
He doesn't like the stock market: ``I'm having a hard time finding things to buy,'' he said. He doesn't like commodities, such as steel, copper or coffee: ``We haven't been buying commodities.'' And he doesn't like bonds: ``I think you're going to see more inflation,'' he said.
Rising prices are the Black Death for bonds, whose coupon payments are fixed.
Nor is Buffett tempted by the recent slump in airline stocks. ``I have an 800 number I call when I get the urge to buy an airline stock, and I call them up at midnight and say, `My name is Warren and I'm an air-holic.' And they talk me down.''
Is Buffett being too gloomy?
Perhaps. But investors should be wary of disregarding his warnings lightly. In 50 years on the stock market, Buffett has built a $43 billion personal fortune from a standing start through his investment acuity, making himself the world's second-richest man. He began betting against the dollar three years ago, just as the greenback was beginning its long slide on currency markets.
As of 1/1/05, the Total Return for Kirk's Newsletter since 12/31/98 is 160%. Here are some more periods and comparative total return calculations:
Kirk S&P500 NASDAQ BRKA
2YR: 12/31/2002 +69% +41% +63% +23%
4YR: 12/31/2000 +35% -3% -12% +26%
6YR: 12/31/1998 +160% 7% -1% +27%
- Click for a free issue of my newsletter
- Suitable for the aggressive growth part of your diversified investment portfolio.
-- posted by Kirk
» Normxxx - Re: Billionaire Buffett has a bear-y bad feeling
In response to Billionaire Buffett has a bear-y bad feeling posted by Kirk:He may be overgloomy, but, man, does he ever reflect my sentiments!
However, (barring HFEs-- Horrific Financial Events), I am predicting little or no down movement for the dollar for (most of) this year. Gold and the dollar should take a breather here.
-- posted by Normxxx
» Kirk - Buffett increasing his position in Gillette
.I have many high growth tech stocks with far, far lower Price/sales and price/book ratios than Gillette. I wonder what makes Buffett think G is a "value stock?"
Considering that Walmart, Costco and the major grocery chains are pushing their own brands to help their profit margins.
If Buffett is counting on Chinese and Indians wanting to buy major American brands, then he has become a growth investor, not a value investor. I am highly suspicious of him announcing he "will buy more" ahead of time. Perhaps he will buy 100 shares then start to sell when others are buying?
Key Statistics for Gillette Co (G)
http://finance.yahoo.com/q/ks?s=G
Trailing P/E (ttm, intraday): 31.58
Forward P/E (fye 31-Dec-05)¹: 26.89
PEG Ratio (5 yr expected)¹: 2.56
Price/Sales (ttm): 5.13
Price/Book (mrq): 19.87
Dividend Yield: 1.26%
Buffett says he's increasing his position in Gillette
http://news.yahoo.com/news?tmpl=story&u=...
Warren Buffett raves about Gillette-P&G deal, buys stock
By Matt Krantz, USA TODAY
Gillette and Procter & Gamble investors are getting their chance to try the Warren Buffett (news - web sites) way.
Most mergers leave investors puzzled over whether to buy more, hold or sell their shares. But in this $57 billion buyout of Gillette by P&G, which ranks as the 13th-largest deal of all time, investors have a role model to follow: legendary investor Buffett.
In an rare glimpse of a post-merger move by a key insider, Buffett beamed about the deal, saying it "is going to create the greatest consumer products company in the world." More important to shareholders of Gillette and P&G, Buffett says he's increasing his position in Gillette so his Berkshire Hathaway holding company will own 7% more of P&G after the deal is done.
"Given Buffett is staying in, that's a good sign," says Steve Goddard, portfolio manager of the New Market fund and owner of Gillette shares. He said he hadn't decided yet, as of early Friday, what he planned to do with his Gillette shares, but added he has faith in P&G's track record.
A closer look at the deal gives investors of both stocks a full understanding of what they should do. It appears owners of:
• Gillette come out ahead. Shares of the leading maker of shaving products soared $5.92 to $51.60 Friday after P&G unveiled its offer. P&G agreed to swap 0.975 of its shares for every Gillette share.
For Gillette investors long waiting for a payback, it doesn't get much better than this. The deal represents a $53.94-a-share value on Gillette shares, which is an 18% premium from the price before the deal was announced. It also gives investors in the company, which has been struggling to digest its purchase of battery maker Duracell, an out if they want it. Gillette, which is expected to post revenue of $10.2 million in 2004, according to Reuters Estimates, plugs into a company that's five times larger.
Above all, it offers Gillette investors a chance to own a piece of a company with sustainable long-term growth potential, analyst Doug Christopher says. Without faster growth, the company's 27 price-earnings ratio (before the deal) based on expected 2004 earnings would have been tough to sustain, Goddard says.
• Procter & Gamble gains options. Certainly, P&G's biggest prize was grabbing Gillette's razor business, which is one of the most profitable in consumer goods. "It's a terrific business and something you rarely have the chance to buy," says Jim Huguet, president of investment manager Great Companies, which owns P&G shares.
But there are risks, since P&G is paying such a premium for Gillette, Christopher says. P&G, which itself had a P-E of 21 times this year's expected earnings going into the deal, is paying more than 28 times Gillette's 2005 expected earnings.
Goddard says he'll review the deal further. But until then, he's siding with Buffett. "I was surprised to hear Buffett support the deal," he says. "That's encouraging to me."
-- posted by Kirk
» Kirk - Billionaire Buffett Honored for Writing
.Billionaire Buffett Honored for Writing
Thu Feb 3, 6:16 PM ET
Add to My Yahoo! Business - AP
OMAHA, Neb. - Billionaire investor Warren Buffett (news - web sites), long lauded for his stock-picking acumen, is being honored for his writing skills.
The National Commission on Writing for America's Families, Schools, and Colleges is honoring Buffett's folksy and easy-to-understand annual report on Berkshire Hathaway Inc. as a major contribution to the art and craft of writing.
"No annual report has had a greater impact on American business," said Bob Kerrey, the commission's chairman and a former Democratic senator from Nebraska.
"With clarity, insight, and wit, each year Warren Buffett advises countless leaders of business and industry, scholars of commerce, public officials, and investors from across the spectrum," said Kerrey, who is president of New School University in New York.
Buffett says he writes his annual report as though he were explaining Berkshire to a sister who has been away for a long time. Often the reports are sprinkled with humor, such as when Buffett blamed himself for his company's poor performance in 1999.
"My performance reminds me of a quarterback whose report card showed four Fs and a D but who nonetheless had an understanding coach," Buffett wrote. "'Son,' he drawled, 'I think you're spending too much time on that one subject.'"
The commission issued its second report to Congress in September titled, "Writing: A Ticket to Work...Or a Ticket Out, a Survey of Business Leaders."
Buffett was to receive his award Friday in Omaha. Honored last year for their contributions to the craft of writing were Sens. Robert Byrd, D-W.V. and Thad Cochran, R-Miss.
-- posted by Kirk
» Kirk - Buffett doubles Comcast stake
.Buffett doubles Comcast stake
http://yahoo.reuters.com/financeQuoteCom...
NEW YORK, Feb 15 (Reuters) - Warren Buffett, one of the best known investors in the United States, doubled his stake in Comcast Corp. (CMCSA.O: Quote, Profile, Research) , sending shares of the nation's largest cable company up more than 3 percent on Tuesday.
Buffett's Berkshire Hathaway Inc.(BRKa.N: Quote, Profile, Research) (BRKb.N: Quote, Profile, Research) doubled its stake in Comcast Corp. to 10 million shares in the fourth quarter, less than 1 percent of outstanding shares. His stake was valued at $328.4 million as of Dec. 31.
Meanwhile, Soros Fund Management LLC said it purchased 2.6 million shares of Time Warner Inc. (TWX.N: Quote, Profile, Research) in the fourth quarter, valued at $50.54 million.
The disclosures also sent shares of Time Warner Inc., which owns the No. 2 cable operator Time Warner Cable, up 1 percent in early trading as investors viewed it as an optimistic sign that media and cable stocks were returning to top stock pickers' good graces.
"It's a validation of the notion that cable is well positioned competitively and an indicator that there's growing recognition of the free-cash generation capacity of the cable platform," said Craig Moffett, an analyst at Sanford C. Bernstein.
Time Warner (TWX.N: Quote, Profile, Research) and Comcast have teamed up to bid for the assets of bankrupt cable operator Adelphia Communications Corp. (ADELQ.PK: Quote, Profile, Research) for an estimated $17 billion.
The two top U.S. cable operators are aggressively launching telephone services in addition to bolstering digital video services, putting them at the vanguard of a battle between telephone companies and cable operators for the next generation of media and telecommunications.
The competition has also helped ignite a flurry of telecommunications mergers, including Verizon Communications Inc.'s (VZ.N: Quote, Profile, Research) $6.75 billion bid for MCI Inc. (MCIP.O: Quote, Profile, Research)
One investor in Comcast and Time Warner said the cable operators may have the upper hand as the systems and infrastructure investments are already in place.
Phone companies have yet to debut competing video products even as they work to work through merger-related issues.
Comcast shares were up $1, or 3.19 percent, at $32.31 in mid-morning trading on the Nasdaq.
-- posted by Kirk
» arommel88 - What is Buffet Looking at here?
http://finance.yahoo.com/q/mh?s=PIR
Is this another real estate grab? I see it has no debt as a typical Buffet stock but what is he looking at?
-- posted by arommel88
» Kirk - Buffett says he 'struck out' in 2004
.Buffett says he 'struck out' in 2004
Berkshire Hathaway profits surged 40 percent in Q4, but dropped 10 percent for year.
March 5, 2005: 12:12 PM EST
NEW YORK, March 5 (Reuters) - Berkshire Hathaway Inc., the holding company run by billionaire Warren Buffett, said on Saturday that quarterly profit surged 40 percent, helped by more than $2.3 billion of investment gains as Buffett bet the U.S. dollar would fall.
For the year, profit fell 10 percent as earned insurance premiums declined.
Fourth-quarter net income for the Omaha, Nebraska-based company rose to $3.34 billion, or $2,172 per Class A share, from $2.39 billion, or $1,553 per share, a year earlier. Revenue increased 1 percent to $20 billion.
Quarterly results reflect the difference between reported full-year results and reported results for the first nine months of 2004. The per-share figures are high because Berkshire has few shares outstanding. Berkshire ended the year with $43.4 billion of cash, up 21 percent from a year earlier.
In a letter to investors, Buffett pointed out that the gain in Berkshire's value had lagged the S&P in 2004, and blamed the shortfall on Berkshire's failure to make profitable acquisitions.
"My hope was to make several multi-billion dollar acquisitions that would add new and significant streams of earnings to the many we already have. But I struck out. Additionally, I found very few attractive securities to buy. Berkshire therefore ended the year with $43 billion of cash equivalents, not a happy position," Buffett wrote.
In his annual letter to shareholders, Buffett said Berkshire increased its stake in foreign currency contracts to $21.4 billion from $20 billion at the end of September. The position is in 12 currencies that Buffett did not name.
Buffett has wagered against the U.S. dollar since 2002 amid concern about rising U.S. trade and budget deficits. Last year the trade deficit rose 24 percent to a record $617.7 billion, while the budget shortfall was a record $412.3 billion.
"The evidence grows that our trade policies will put unremitting pressure on the dollar for many years to come," Buffett said in his annual letter to Berkshire shareholders. "As W.C. Fields once said when asked for a handout: 'Sorry, son, all my money's tied up in currency."'
As of Dec. 31, the greenback bought 8.3 percent fewer euros and 6.9 percent fewer Japanese yen than it did on Sept. 30. Compared with the end of 2002, the dollar bought 22.6 percent fewer euros and 13.7 percent fewer yen.
Buffett said that if the United States promptly adopts policies to cut the budget deficit, Berkshire might suffer losses on its currency contracts. But he said Berkshire remains heavily concentrated in dollar-based assets and would benefit from a strong dollar and low inflation.
For the year, profit fell 10 percent to $7.31 billion, or $4,753 per Class A share, from $8.15 billion, or $5,309 per share, a year earlier. Revenue increased 16 percent to $74.4 billion.
The 74-year-old Buffett, the world's second richest person according to Forbes magazine, is known as the "Oracle of Omaha" after Berkshire's hometown.
Berkshire Class A shares closed Friday at $89,300, while its Class B shares closed at $2,979, both on the New York Stock Exchange.
Find this article at:
http://money.cnn.com/2005/03/05/news/for...
-- posted by Kirk
» bob90245 - Buffet on Index Funds
Excerpt from the Berkshire Hathaway 2004 Annual Report:
Over the [last] 35 years, American business has delivered terrific results. It should therefore have been easy for investors to earn juicy returns: All they had to do was piggyback Corporate America in a diversified, low-expense way. An index fund that they never touched would have done the job. Instead many investors have had experiences ranging from mediocre to disastrous.There have been three primary causes: first, high costs, usually because investors traded excessively or spent far too much on investment management; second, portfolio decisions based on tips and fads rather than on thoughtful, quantified evaluation of businesses; and third, a start-and-stop approach to the market marked by untimely entries (after an advance has been long underway) and exits (after periods of stagnation or decline). Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.
-- posted by bob90245
» Kirk - David Korn on Warren Buffett
.David had a nice write-up of Warren Buffett in his newsletter this weekend. Below is what he said about Buffett.
THE ORACLE OF OMAHAAs you know, I keep tabs on Warren Buffet who is arguably the greatest living investor. This weekend, Buffet's company Berkshire Hathaway released its 2004 annual report. In his letter to shareholders, Buffet said he had hoped to make several multibillion dollar acquisitions last year, but "struck out" since he found very few attractive securities to buy. As a result, Berkshire ended the year with $43 billion of cash equivalents. That's a lot of dry powder.
I was also curious to see if Buffet was still betting on the U.S. dollar's decline, and low and behold, he actually increased his bet against the dollar and now has $21.4 billion spread across 12 foreign currencies. It bears noting that prior to March 2002, neither Berkshire nor Buffet had ever traded in currencies. What prompted the change? According to Buffet, "[T]he evidence grows that our trade policies will put unremitting pressure on the dollar for many years to come..." Buffet did express some apprehension over his position saying he is less confident in his bet today because "so many pundits predict weakness for the dollar." I like that -- Buffet is a bit of a contrarian.
Are you curious as to Mr. Buffet's stock holdings? In terms of market capitalization, here is the order of his top 10 common stock investments: (1) American Express Company; (2) The Coca-Cola Company; (3) The Gillette Company; (4) H&R Block; (5) M&T Bank Corp; (6) Moody's Corporation; (7) PetroChina "H" Shares; (8) The Washington Post Company; (9) Wells Fargo & Company; and, (10) White Mountains Insurance. (Berkshire is the biggest shareholder of Coke and Gillette).
Read the 2004 Berkhire Hathaway Inc. Annual Report and most definitely Chairman Warren Buffet's Letter to Shareholders that starts on page 3 at the following link:
http://berkshirehathaway.com/2004ar/2004...
Bob Brinker showed up to helm the Starship Moneytalk this weekend, despite the fact that his newsletter went out last week. I wasn't planning on doing an Interpretation, but I think it was an important weekend in that for the first time, Bob explored the possibility of a bubble in the real estate market. Read on...
To get a free sample of David’s newsletter, visit this site and follow the instructions to get on the mailing list.
-- posted by Kirk
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