Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Berkeshire Hathaway Loses AAA RatingHat-tip to the guy I overheard at the next table at the internet cafe I'm hanging out in.Buffett's Berkshire Has AAA Debt Rating Cut by Fitch By Erik Holm | 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 on 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 companies in the U.S. Berkshire stock fell 35 percent in 12 months on concern that Buffett's bets on derivatives—instruments he has called "financial weapons of mass destruction"—will crush profit at the firm. Read the rest of the article. If I'd been keeping up with Yves Smith at Naked Capitalism, I'd have found out sooner. Here's what she had to say:
Labels: 303 Cafe, Berkshire Hathaway, financial crisis, recession, Warren Buffet, Yves Smith Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Warren Buffet Feels the PainMore from Across the Curve. And here's what the FT has to say out it:Buffett's Berkshire has worst results ever By Justin Baer in New York Published: February 28 2009 20:18 | Last updated: February 28 2009 20:18 Warren Buffett conceded that his holding company, Berkshire Hathaway, turned in its worst performance on record as the financial crisis drew the world's economy into a deepening recession, and gave investors little reason to believe a turnaround is imminent. In his annual letter to Berkshire shareholders, Mr Buffett recounted how frozen credit markets dovetailed with tumbling home and stock prices to imperil many of the world's biggest banks and produce "a paralyzing fear that engulfed the country." "By yearend," he wrote, "investors of all stripes were bloodied and confused, much as if they were small birds that had strayed into a badminton game." The billionaire also urged his legions of followers to remember that the stock market usually rises--the Standard & Poor’s 500 Index has produced annual increases in 75 per cent of the past 44 years--and may do so again even if the downturn persists. "We're certain, for example, that the economy will be in shambles throughout 2009--and, for that matter, probably well beyond--but that conclusion does not tell us whether the stock market will rise or fall," he wrote. Regardless, Mr Buffett wrote, Berkshire will stick with a strategy that has produced an annual compounded growth in book value of 20.3 per cent: maintaining its "Gibraltar-like" financial strength, improving the competitive position of its existing businesses and making new acquisitions that bolster earnings. Read the rest of the article Labels: Across the Curve, Berkshire Hathaway, financial crisis, Warren Buffet Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
