Cramer, Kass and Barron's all bash Buffett this week.
Barron's had this to say Saturday:
EVEN GREAT INVESTORS MAKE MISTAKES. Warren Buffett's affinity for a group of financial stocks, including American Express (AXP), Wells Fargo (WFC) and U.S. Bancorp (USB), is likely hurting his equity returns in 2009...
We estimate Berkshire's equity portfolio could have dropped 14% in 2009 through Thursday, against an 8% decline in the S&P 500.
Our estimate is based on the change in value of Berkshire's 16 largest equity holdings. These holdings historically have accounted for over 85% of Berkshire's portfolio. The tough 2009 follows a good showing in 2008, when Berkshire's equity positions declined -- by our estimate -- about 25%, 13 percentage points better than the S&P 500. Our calculations for 2009 are based on Berkshire's reported holdings on Sept. 30. There admittedly may have been some changes since...
After a flurry of high-profile investments in early October, including $5 billion in Goldman Sachs preferred carrying a 10% dividend, and a similar $3 billion deal involving General Electric , Berkshire hasn't unveiled any big new investments. Why? Our guess is that its once-enormous cash hoard has been depleted. (read the whole story here)
Friday Doug Kass had this to say:
It's never paid to bet against America.... We come through things, but it's not always a smooth ride....This is an economic Pearl Harbor."
-- Warren Buffett, "Dateline" interview on NBC (Jan. 18, 2009)
On Sunday evening, Warren Buffett sat down with NBC's Tom Brokaw for a marvelous and straightforward interview. (Here is the complete transcript.)
Early in 2008, I took a controversial and negative view on Berkshire Hathaway's (BRK.A Quote - Cramer on BRK.A - Stock Picks) stock. During the late summer, I profitably covered a short I put on Berkshire at approximately $140,000 per share.
Based on the recent deterioration of Berkshire's investments, I might have been premature. (Berkshire's common now trades for under $89,000 a share.)
In the last 60 days, Berkshire's investment portfolio has plummeted in value. Buffett has lost over $4.5 billion alone on his 300-million-share investment in Wells Fargo since Dec. 1, 2008, and another $1 billion loss on U.S. Bancorp's shares; both stocks have been halved in less than two months. His most recent investments in Burlington Northern Santa Fe, General Electric and Goldman Sachs have deteriorated markedly in value from his cost basis.
Equally important, I have repeatedly uttered the notion that Berkshire's large derivative position -- namely, short puts on the S&P 500 -- was evidence of investment style drift. Regardless of that view, Berkshire has now likely recorded a nonrealized loss in excess of a $10 billion on the index short put position. A loss on that scale, whether realized or unrealized, is large even for Warren Buffett.
In 2008 and (so far) 2009, The Oracle of Omaha has been wrong; it has paid to bet against America.
Friday Cramer had this to say:
Still can't believe this Buffett portfolio and what a beating it is taking. AND THE SILENCE OF A MAN NOT KNOWN AS A LAMB. Thanks Doug for bringing it to everyone's attention..
Where is Buffett? Where is some sort of confirmation of the big General Electric play? Where is the endorsement and all of the great things he had to say about it?
He also bad mouthed Buffett on his show.
But the best analysis I could find on Buffett this week was in the blogs.
Tuesday Wall Street Manna had this to say:
On December 31, 2007 Berkshire Hathaway owned $75 billion of equity securities, with a $44 billion cost, and an unrealized loss of $1 billion, and a unrealized gain of $31 billion.
On September 30, 2008 Berkshire Hathaway owned $76 billion of equity securities, with a $52 billion cost, and an unrealized loss of $2.5 billion, and an unrealized gain of $27 billion.
In those 9 months, Buffett's buffer of what he paid for his stocks, and what they were worth went from $30.3 billion to $24.2 billion.
But since September 30, much of his core holdings have dropped considerably. Let's look at a few.
On September 30, 2007:
Wells Fargo was at $37.53. It closed today at $14.23. Buffett owned 290 million shares, a drop of $6.75 billion dollars.
ConocoPhillips was at $73.25. It closed today at $45.69. Buffet owned 60 million shares a drop of $1.65 billion dollars.
Coca Cola was at $52.88. It closed today at $42.88. Buffett owned 200 million shares a drop of $2 billion dollars.
American Express was at $35.43. It closed today at $15.60 Buffett owned 151 million shares, a drop of $3 billion dollars.
Burlington Northern was at $92.43. It closed today at $61.25. Buffett owned over 63 million shares, a drop of $2 billion dollars.
US Bancorp was at $36.02. It closed today at $15.34. Buffett owned 73 million shares, a drop of $1.5 billion dollars.
I won't even look at his position in GE, or his bet on Goldman Sachs, because they are preferreds, and I won't even look at his derivative bets where he sold puts on market indexes, but these 6 stocks knocked $17 billion of value off of Berkshire Hathaway's claim paying ability. So we are seeing cracks in Berkshire Hathaway. And don't think Warren Buffett doesn't know it. Read the transcript of his latest interview with Tom Brokaw. You can feel the nervous laughter. Why else does he call this an economic Pearl Harbor?
Oh, whoops that was my story!
Now it's the nation's!
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