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Top 235. May 1, 2005 6:18 AM

» Kirk - Buffett playing it cool in overheated market

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[ Kirk's Editor Comment: "But except for last year's half billion-dollar purchase of a 1.3 percent stake in a Chinese oil company, Buffett said he has been unable to find anything he likes at an acceptable price. As a result, Berkshire is sitting on more than $40 billion in cash."

DJIA = 10192.51
S&P 500 = 1156.85
NASDAQ = 1921.65
^RUT = 579.38

I'd love to ask him "What price would MSFT have to fall to before you would invest $1B of your cash into it?" But I doubt he'd say because others would "front run" his price and make it all that much harder to get. Buffett usually doesn't say what he is buying until after the fact. I'd also be interested in why he doesn't think Banks like Citigroup are good buys at such low multiples and would he didn't buy oil companies back when they had PEs around 10 and now sport much higher PEs and higher profits for 3 and 4 times gains.]

Buffett playing it cool in overheated market

By James P. Miller Tribune staff reporter 31 minutes ago

Warren Buffett, the world's most celebrated investor, told stockholders of his Berkshire Hathaway holding company on Saturday that most of the stocks and companies he looks at are overpriced.

As a result, he is sitting on billions of dollars--and keeping busy in the currency markets, betting that the U.S. dollar will weaken further.

He warned the nearly 20,000 stockholders at the company's annual meeting that the U.S. economy may face turbulence because of the swelling trade deficit.

The tidal wave of dollars America is shipping abroad to buy oil and manufactured goods and the IOUs that offshore interests are buying from Uncle Sam to fund the nation's deficit spending are likely disrupt the U.S., Buffett cautioned -- particularly in a global economy where wealth is building up in the hands of what he called "hair-trigger" investors.

Rarely does Buffett field hard questions at the yearly meetings, which are largely celebrations of mutual prosperity. There had been speculation that it would be different this year because a major Berkshire subsidiary, General Reinsurance Corp., has become involved in an insurance industry scandal.

Mum on General Re

But Buffett said Saturday he couldn't discuss the matter, and his stockholders didn't pursue it.

General Re, which Berkshire acquired in 1998, sells "reinsurance" to insurance companies, allowing the insurers to reduce some of the risks they assume by writing policies. Federal investigators are reviewing whether General Re was complicit in a reinsurance transaction that allowed New York insurance giant American International Group to boost its financial reserves when markets were concerned about whether AIG had adequate reserves to meet its liabilities.

AIG has admitted that it accounted for the transaction improperly, but authorities haven't finished examining General Re's role.

Over four decades, Buffett, an Omaha native, made himself a multibillionaire and a great many of his investors millionaires by practicing a value-investing technique that stresses market fundamentals and a buy-and-hold strategy.

Because of that success, Berkshire's annual meetings in the last 15 years or so have grown increasingly popular.

In a celebration that has been called a "capitalist carnival," a flood of stockholders spends a spring weekend eating at the steakhouse that 74-year-old Buffett likes, having cocktails and shopping for jewelry at a large jewelry store Berkshire owns and patronizing the Dairy Queen where Buffett likes to stop (he had his investing vehicle acquire Dairy Queen, the company, a few years ago).

Sweating for Schwarzenegger

Before the formal meeting, a film usually is a warm-up. This year it featured Buffett, the second-richest man on Earth (after
Bill Gates), doing push-ups and sit-ups while California Gov.
Arnold Schwarzenegger, in camouflage garb, shouted cadence.

For many Berkshire investors, however, the highlight of the weekend is the meeting itself, during which Buffett sits at a bare table on a brightly lighted stage and--with his 81-year-old investing partner, Berkshire Vice Chairman Charlie Munger, at his side--takes questions from the crowd and ruminates about assorted financial trends.

Buffett drinks Coke from a can while he holds forth--Berkshire owns $8 billion of Coca-Cola stock--and he often eats chocolates produced by a candy company Berkshire acquired in 1972. When he makes a joke, which he frequently does, the investor known as "the oracle of Omaha" sounds remarkably like another plain-talking Nebraskan, the late Johnny Carson.

Sticks to the basics

Berkshire's vast span of holdings includes companies that sell furniture and jewelry or make bricks, carpets, shoes and underwear.

But except for last year's half billion-dollar purchase of a 1.3 percent stake in a Chinese oil company, Buffett said he has been unable to find anything he likes at an acceptable price. As a result, Berkshire is sitting on more than $40 billion in cash.

"If the market gets cheaper, we'll have a lot more things we can do with our money," he told the meeting. "Right now we've got more money than brains."

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jpmiller@tribune.com

-- posted by Kirk

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Top 236. May 1, 2005 7:00 AM

» Kirk - Buffett Maintains Dollar Bet After $310M in Losses

Buffett Maintains Dollar Bet After $310 Mln in Losses (Update5)

April 30 (Bloomberg) -- Berkshire Hathaway Inc. Chairman Warren Buffett said he maintained a more than $21 billion bet against the U.S. dollar even after it cost the insurance and investment company about $310 million in the first quarter.

Berkshire also plans to announce an insurance acquisition of almost $1 billion in the next few weeks and on May 6 will say first-quarter profit from operations rose about $400 million before taxes, Buffett said today at the company's annual meeting of shareholders in Omaha, Nebraska. The increase suggests operating profit, which excludes gains or losses from currencies and other investments, rose 24 percent from a year earlier.

Buffett, who's been betting against the dollar since 2002, said the company kept slightly more than $21 billion in foreign currency forward contracts through the first quarter even as the dollar rose 4 percent against other currencies. Buffett said he'd buy more contracts if it weren't for the skepticism of Vice Chairman Charles Munger.

``Charlie is less enthusiastic about our foreign currency position than I am,'' Buffett told thousands of shareholders and admirers in an arena more frequently used for rock concerts. ``I might have somewhat more if I didn't know I'd have him sitting next to me here next year.''

Buffett, 74, is making the dollar wager on concern that widening U.S. trade and budget deficits will erode its value. The New York Board of Trade's Dollar Index, which measures the dollar against six other currencies, fell 7.5 percent in the fourth quarter, leading to a $1.63 billion gain for Berkshire. Forward contracts are agreements to purchase foreign currencies on a future date at the current price.

Greenberg Praise

Buffett and Munger, 81, also today praised Maurice ``Hank'' Greenberg, who was forced to step down as chairman and chief executive of American International Group Inc. in March amid a regulatory investigation into a four-year-old reinsurance transaction with Berkshire's General Re Corp. unit. AIG, the world's largest insurer, has since admitted to improperly booking the transaction to manipulate its financial picture.

``He developed an extraordinary company in his lifetime,'' Buffett told the crowd of Greenberg, 79. He ``was the number one man in insurance.''

``Whatever comes along, people are going to find a lot was done right at AIG over the years,'' Munger said.

New York Attorney General Eliot Spitzer and the Securities and Exchange are investigating instances where a type of reinsurance known as ``finite'' really amounts to loans, allowing companies to mask losses even though little or no risk is transferred.

`Knowing Participation'

Some contracts are retroactive in that they insure other insurers who already know there will be claims, just not when they will be paid out.

Berkshire's liability for clients' accounting of finite reinsurance depends on ``whether there is knowing participation,'' Buffett said today. ``They could be doing anything with their accounting and it probably wouldn't be limited to what they are doing with us.''

Berkshire and Buffett haven't been accused of wrongdoing in the AIG transaction, and Spitzer, who had investigators interview Buffett on April 11, said then that Buffett was a ``cooperative witness'' rather than a target.

Insurance regulators in Virginia and Tennessee have sued General Re for contracts with a failed medical malpractice insurer, and the liquidator of a collapsed Australian insurer said it may assert claims against General Re. General Re said last month that it was cooperating with probes in Australia and denied the allegations in the Virginia and Tennessee suits.

`Nothing Wrong'

``There is nothing wrong at all in my view with retroactive contracts,'' Buffett said today, declining to comment on investigations of Berkshire contracts. ``The authorities are looking at contracts that had no purpose and were possibly misused.''

Retroactive reinsurance has ``value to both parties,'' Buffett said. ``Reducing volatility per se is not bad at all, but you can also get into abuses of that.''

Buffett, renowned for investing in out-of-favor companies, is searching for ways to deploy Berkshire's more than $44 billion of cash. Today he said there is limited opportunity to make acquisitions other than the insurance purchase he will disclose soon.

``Right now we are positioned very badly in terms of buying businesses,'' he said. ``Your Berkshire stock will not do as well under these conditions as it did five years ago or 20 years ago. And I don't have the magic solution for it.''

Dividend

Berkshire's stock has fallen 9.7 percent in the past 12 months. The shares gained $749.90 to $84,350 in New York Stock Exchange composite trading yesterday.

Buffett said he may entertain the idea of issuing a dividend should he continue to find few opportunities to use Berkshire's cash.

``The test is whether the money can be used very successfully within the business,'' he said. ``If we sit here a few years from now and we have not successfully deployed more cash, I think the burden of proof will have shifted dramatically.''

Berkshire reported about $1.66 billion in pretax operating profit in the first quarter of 2004, meaning an increase of $400 million is a 24 percent gain.

The company's $310 million in currency losses, along with gains on other investments, resulted in about $120 million in overall investment losses in the first quarter, Buffett said, without specifying whether his figures are before or after taxes. A year ago, the company had $636 million in pretax investment gains, meaning Berkshire will report a decline in first-quarter net income.

Social Security

Underwriting profit from insurance was higher than Berkshire expected, rising by about $200 million to $500 million, Buffett said. That kind of gain won't continue for the rest of the year, he said.

Buffett and Munger also told shareholders they oppose U.S. President George W. Bush's plan to allow privatization of Social Security because the government has a duty to take care of the country's elderly.

``The Republicans are out of their cotton-picking minds on this issue,'' said Munger, a self-described right-wing Republican. Social Security is ``one of the most successful things that the government has ever done.''

To contact the reporter on the story:
David Plumb in Omaha, Nebraska at dplumb@bloomberg.net;
Jesse Westbrook in Omaha, Nebraska at jwestbrook1@bloomberg.net

Last Updated: April 30, 2005 19:14 EDT

-- posted by Kirk

Top 237. May 1, 2005 10:07 AM

» Jas_Jain - Re: Buffett playing it cool in overheated market

In response to Buffett playing it cool in overheated market posted by Kirk:

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"I'd love to ask him "What price would MSFT have to fall to before you would invest $1B of your cash into it?""

Hello Kirk,

I would love to ask you: Do you really know the long-term performance history of tech Scams? How many large tech companies are basically extinct? (Hint: DEC, the second largest computer company; Micom and Newbridge Networks, at one point the largest mkt. cap Networking/datacom companies).

What is the life expectancy of a successful tech company?

Jas

-- posted by Jas_Jain

Top 238. May 1, 2005 11:50 AM

» Bill_Duffy - Re: Buffett playing it cool in overheated market

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I had read elsewhere that Buffet has recently made substantial purchases of BUD and CMCSA. The BUD purchase was announced 4-21-05 anf the purchases of CMCSA were made in Q4-04.

The Chinese Oil company he bought was Petrochina, PTR. This one could rise substantially if the Yuan is allowed to float.

-- posted by Bill_Duffy

Top 239. May 2, 2005 8:28 AM

» Kirk - The oracle speaks

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KEY:

"Overall, I'm an enormous bull on the country. This is the most remarkable success story in the history of the world. It does not make sense to bet against America. I do not get pessimistic about the country. The real worry is what can be done by terrorists or governments that may have access to nuclear or other weapons....

"If you had to make a choice between long-term bonds at around 4.5 percent and equities for the next 20 years, I would certainly prefer equities. But if people think they can earn more than 6-7 percent a year, they're making a big mistake. I don't think we're in bubble-type valuations in equities -- or anywhere close to bargain valuations.

"If you told me I had to go away for 20 years, I would rather take an index fund over long-term bonds. You'll get a chance to do something extremely intelligent with your money in the next few years. But right now there doesn't seem to be a clear enough direction to conclude anything dramatic."

The oracle speaks

Warren Buffett and Charles Munger warn of real estate 'bubble,' the risk of terrorist nukes.

May 2, 2005: 9:22 AM EDT

By Jason Zweig

OMAHA (CNN/Money) - It was below freezing here early Saturday morning, with frost silvering the golf courses and rolling lawns of the city where Warren Buffett's Berkshire Hathaway Inc. is headquartered.

But the atmosphere was warm inside the Qwest Center arena, where roughly 20,000 shareholders gathered from around the world to hear Buffett and his vice chairman, Charles Munger, answer questions for nearly six hours.

Not a single individual shareholder asked whether Berkshire might be implicated in the widening scandal about alleged earnings manipulations at American International Group – and even the money managers in the audience whose questions touched on the subject approached it gingerly. (Buffett announced at the outset that, at the request of the investigators who are exploring the AIG case, he could not discuss what he or other Berkshire executives might have revealed about AIG to the authorities.)

Buffett's shareholders are true believers; to them, the idea that he could have done (or known about) anything wrong is absurd.

In his answers to shareholders' questions, Buffett made it clear that he remains concerned about the trade deficit and the U.S. dollar, although he is bullish on the long-term strength of the U.S. economy. But he and Munger issued stern new warnings about the residential real estate "bubble," the destabilizing effect of hedge funds on the financial markets, and the possibility of another terrorist strike against the United States.

They also warned that they do not see a clear future for pharmaceutical stocks, that GM and Ford face severe trouble over pension and health costs, that hedge funds could wreak havoc in a market decline, and that the New York Stock Exchange is doing a disservice to investors by going public.

As always, Buffett spoke in elaborate paragraphs when replying to shareholders' questions, while Munger spoke in terse, tart sentences. The two often disagree about political and social policy, but for much of this meeting they sounded like identical twins. What follows is an edited and approximate transcript of their remarks.

On real estate

Buffett: "A lot of the psychological well being of the American public comes from how well they've done with their house over the years. If indeed there's been a bubble, and it's pricked at some point, the net effect on Berkshire might well be positive [because the company's financial strength would allow it to buy real-estate-related businesses at bargain prices]....

"Certainly at the high end of the real estate market in some areas, you've seen extraordinary movement.... People go crazy in economics periodically, in all kinds of ways. Residential housing has different behavioral characteristics, simply because people live there. But when you get prices increasing faster than the underlying costs, sometimes there can be pretty serious consequences."

Munger: "You have a real asset-price bubble in places like parts of California and the suburbs of Washington, D.C."

Buffett: "I recently sold a house in Laguna for $3.5 million. It was on about 2,000 square feet of land, maybe a twentieth of an acre, and the house might cost about $500,000 if you wanted to replace it. So the land sold for something like $60 million an acre."

Munger: "I know someone who lives next door to what you would actually call a fairly modest house that just sold for $17 million. There are some very extreme housing price bubbles going on."

The trade deficit and the value of the dollar

Buffett: "That really is the $64,000 question. It seems to me that a $618 billion trade deficit, rich as we are, strong as this country is, well, something will have to happen that will change that. Most economists will still say some kind of soft landing is possible. I don't know what a soft landing is exactly, in how the numbers come down softly from levels like these....

"There are more people [like hedge-fund managers] that go to bed at night with a hair trigger than ever before, it's an electronic herd, they can give vent to decisions that move billions and billions of dollars with the click of a key. We will have some exogenous event, we will have that. There will be some kind of stampede by that herd....

"When you have far greater sums than ever before, in one asset class after another, that are held by people who operate on a hair-trigger mechanism, then they lend themselves to more explosive outcomes. People with very short time horizons with huge sums of money, they can all try to head for the exits at the same time. The only way you can leave your seat in burning financial markets is to find someone else to take your seat, and that is not always easy...."

Munger: "The present era has no comparable referent in the past history of capitalism. We have a higher percentage of the intelligentsia engaged in buying and selling pieces of paper and promoting trading activity than in any past era. A lot of what I see now reminds me of Sodom and Gomorrah. You get activity feeding on itself, envy and imitation. It has happened in the past that there came bad consequences."

Buffett: "I have no idea on timing. It's far easier to tell what will happen than when it will happen. I would say that what is going on in terms of trade policy is going to have very important consequences."

Munger: "A great civilization will bear a lot of abuse, but there are dangers in the current situation that threaten anyone who swings for the fences."

Buffett to Munger: "What do you think the end will be?"

Munger: "Bad."

Buffett: "We're like an incredibly rich family that owns so much land they can't travel to the ends of their domain. And they sit on the front porch and consume a little bit of everything that comes in, all the riches of the land, and they consume roughly 6 percent more than they produce. And they pay for it by selling off land at the edge of the landholdings that can't see. They trade away a little piece every day or take out a mortgage on a piece.

"That scenario couldn't end well. And we, also, keep consuming more than we produce. It can go on a long time. The world has demonstrated a diminishing enthusiasm for dollars in the last few years as they get flooded with them – every day there's $2 billion more going out than in. I have a hard time thinking of any outcome from this that involves an appreciating dollar.

[But, Buffett later added, he is not predicting an end to U.S. economic power.] "If you have a good business in this country that's earning dollars, you'll still do okay. Twenty years from now, a couple percentage points of GDP may go to servicing the deficit, but you'll do fine.... I don't think trade deficits will pull down the whole place; the country will survive those dislocations. I'm not pessimistic about the U.S. at all.... We have over 80 percent of our money tied to the dollar. It's not like we've left the country."

The threat of terrorism

Buffett: My job is to think absolutely in terms of the worst case and to know enough about what's going on in both [Berkshire's] investments and operations that I don't lose sleep. Everything that can happen will happen.... It's Berkshire job to be prepared absolutely for the very worst. A few years ago we did not have NBCs [nuclear, biological and chemical attacks] excluded from our exposure, but we do now....

"If you go to lastbestchance.org, you can obtain a tape, free, that the Nuclear Threat Initiative has sponsored, that has a dramatization that is fictional but is not fanciful. We would regard ourselves as vulnerable to extinction as a company if we did not have nuclear, biological and chemical risks excluded from our policies. There could be events happening that could make it impossible for our checks to clear the next day."

The overall climate for investors

Buffett: "If the [stock] market gets cheaper, we will have many more opportunities to do something intelligent with money. We are going to be buying things [like stocks and other financial assets] for as long as I live, just as I'm going to be buying groceries for the rest of my life. Would I rather have grocery prices go up or down?

"The stock market works the same way: If I'm a net buyer, obviously I would rather have prices go down than up. Charlie and I spend no time talking about what the stock market is going to do, because we don't know. We're not operating on basis of a market forecast. We don't make a list of the good things that are happening, or bad things.

The auto industry

Buffett: "[GM boss] Rick Wagoner and [Ford chairman] Bill Ford have both been handed, by past managers, extremely difficult hands to play. They're not the consequences of their own doing, but they have inherited a legacy cost structure, with contracts put in place decades ago, that make it very difficult for them to be competitive in today's world.

"Just imagine if they'd been made to sign contracts that made them pay several more tons per steel than their competitors have to, people would feel that's untenable. [GM and Ford] have to pay contracts that give them immense obligations for health-care and retirement annuities at high cost. Their competitors can buy steel and other commodities no cheaper, but the competitors don't have nearly the same level of costs for these [health-care and retirement expenses].

"Someone once asked Bill Buckley what he would do if he actually won his race for New York mayor back and the 1960s and he said, 'First thing I'd do is ask for a recount.' Well, that's what I'd do at GM. You've got a $90 billion pension fund, $20 billion set aside for health-care liabilities, and the whole equity value of the company is $14 billion. That's not sustainable.... Something will have to give."

Munger: "Warren gave a very optimistic prognosis. Some people seem to think there's no trouble just because it hasn't happened yet. If you jump out the window at the 42nd floor and you're still doing fine as you pass the 27th floor, that doesn't mean you don't have a serious problem. I would want to address the problem right now. They'd better face it."

The NYSE's merger with Archipelago

Buffett: "I personally think it would be better if the NYSE remained as a neutral, not-for-big-profit institution. The exchange has done a very good job over the centuries. It's one of the most important institutions in the world. The enemy of investment is activity.... I know the American investor will not be better off if volume doubles on the NYSE, and I know the NYSE will be trying to figure out how to do that if it is trying to maximize its own earnings per share. GM or IBM will not earn more money if their stock turns over more actively, but a for-profit NYSE will."

Munger: "I think we have lost our way when people like the [board of] governors and the CEO of the NYSE fail to realize they have a duty to the rest of us to act as exemplars. You do not want your first-grade school teacher to be fornicating on the floor or drinking alcohol in the closet and, similarly, you do not want your stock exchange to be setting the wrong moral example."

Whether pharmaceutical stocks have become bargains

Buffett: "That industry is in a state of flux right now. It's historically earned very good returns on invested capital, but it could well be that the world will unfold differently in the future than in the past. I'm not sure I can give you a good answer on that."

Munger: "We just throw some decisions into the 'too hard' file and go onto others."

-- posted by Kirk

Top 240. May 2, 2005 9:19 AM

» Kirk - Omaha Real Estate

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Does Buffett own the hotels in Omaha near where he has his annual shareholder meeting where 20,000 come each year? smile

-- posted by Kirk

http://quote.bloomberg.com/apps/news?pid...

Top 241. May 6, 2005 8:59 AM

» Kirk - Buffett's Talk of Dividend Sends Daunting Message

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With all the cash BRKA has, why would you want to buy it now only to have some of that cash returned to you as a dividend that you will pay taxes on? This is an interesting problem. If I owned BRKA due to a recent purchase, ie I didn't have huge gains from holding it for 25 years, I'd only want my dividend to match cash being generated. I'd not want to pay a tax on returned capital.

I like buying small companies with loads of cash because it means they have the resources to survive delays in getting their new products out, but if I am looking to buy a large cap company, I'd sure not want some of my purhase returned to me in the form of a taxable dividend. For this reason, I think BRKA will pay a small dividend and not do a big, one time payment ala MSFT.

Buffett's Talk of Dividend Sends Daunting Message: Chet Currier

May 6 (Bloomberg) -- If the king of investors can't find anything worth buying, where does that leave the rest of us?

The question has been hard to avoid ever since the annual meeting last weekend of Berkshire Hathaway Inc., at which Chairman Warren Buffett once again lamented a dearth of investment opportunities.

Berkshire and its predecessor companies haven't paid a dividend since the 1960s, when Buffett was just getting started on his celebrated financial career. He has always said Berkshire wouldn't pay a dividend as long as there was a promising way for him to put the money to work.

Now, with cash on hand ballooning to $44 billion at last count, he says Berkshire might have to consider it.

``If we sit here a few years from now and we have not successfully deployed more cash, I think the burden of proof will have shifted dramatically,'' Buffett told the assembled multitudes on their annual pilgrimage to Berkshire's hometown of Omaha, Nebraska.

What's wrong with starting a dividend? Seems like a fair enough way to reward aging investors who have patiently stuck with Berkshire all these years, not excluding the 74-year-old Buffett himself.

Gates Opened

For a precedent, dividends have been paid since 2003 at Microsoft Corp., whose chairman, Bill Gates, is the only person ahead of Buffett on the Forbes billionaire list. Gates just happens to be a new member of Berkshire's board.

The thing is, Berkshire stands apart from Microsoft and most other industrial companies. It has long been viewed as a kind of super hedge fund or mutual fund, run by a legendary leader able and willing to find hidden gems in any corner of the markets.

Buffett buys companies whole or parts of them through stock purchases. He has bought bonds when they suited him, and right now he has a big bet against the dollar in foreign exchange. When he says he is running out of ideas, it's certainly not for lack of knowing where to look.

Buffett outlined his basic view of dividend policy in his 1984 letter to shareholders: ``Historically, Berkshire has earned well over market rates on retained earnings. Under such circumstances, any distribution would have been contrary to the financial interest of shareholders.''

Overabundance

As long as the company thought it could keep doing that, he went on to say, ``We will continue to retain all earnings.''

Buffett faces a problem born of his own success -- a mountain of money that gets harder to put to work the larger it grows. An insurance acquisition of ``under $1 billion'' on which he says he is working will barely dent the pile.

With everything that makes him extraordinary, Buffett's dilemma is no different from a problem that faces all investors collectively. Twenty-five years of a financial boom have attracted so many people into the investing game that the naturally occurring opportunities may have been all but picked clean.

In many fields of endeavor, this kind of thing isn't an issue. No matter how many books flood the publishing market, for instance, there is no theoretical limit on how many good ones remain to be written. The field is as big as the human imagination.

Different Deal

In gambling, a casino can always put in more slot machines and blackjack tables. Investing doesn't work that way, since investments must ultimately be based on entities of real or potential economic value -- the supply of which, alas, isn't boundless.

A strong case can be made that the too-many-investors- chasing-too-few-good-investments bind is the biggest single negative hanging over the markets nowadays.

It wouldn't get much better if Berkshire paid a dividend instead of investing its entire cash horde. Some of the payout would go to income taxes -- although, if recent U.S. tax-law changes remain in effect, no more on a percentage basis than if the wealth had been distributed via capital gains as investors sold Berkshire shares.

Once the tax bill is settled, Berkshire would have transferred the problem of what to do with the money from itself to its shareholders, again including Buffett himself.

That's the most dispiriting part of the message a Berkshire dividend would send: Buffett and his cohort Charles Munger, considered among the best financial minds anywhere, would be attesting that they had given up on finding a good use for the money. So here, shareholders, your turn to try.

To contact the writer of this column:
Chet Currier in New York ccurrier@bloomberg.net

Last Updated: May 6, 2005 00:08 EDT

-- posted by Kirk

Top 242. May 6, 2005 6:54 PM

» axolotl - Re: Buffett's Talk of Dividend Sends Daunting Message

I agree - the dividend talk is a negative for potential buyers like me. However, I think Buffett will have a very good year despite a lower q1 no. and I think the book value continues to grow sort of like pressure building in a boiler - one day the stock will spike upward. I said years ago that he should buy Canada and I was at least half serious - it is right under his nose - those Canadian oil co.s should be gone over by someone trusted by Buffett and there has to be at least a few billion in buys. BTW, Kirk, how has your newsletter performed so far in volatile 2005?

-- posted by axolotl

Top 243. May 6, 2005 8:21 PM

» Kirk - Re: Re: Buffett's Talk of Dividend Sends Daunting Message

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In response to Re: Buffett's Talk of Dividend Sends Daunting Message posted by axolotl:

BTW, Kirk, how has your newsletter performed so far in volatile 2005?

Down YTD but beating its benchmark. I think I still have 130% over BRKA since 12/31/98 too! smile Send me an email if you want more info using the "Free Issue of my Newsletter" link below.

-- posted by Kirk