Berkshire Hathaway has always been an interest of mine, even since I found the common stock that was worth more than $100,000 a share! Warren Buffett and his Berkshire Hathaway has always been something people in the investment looked to, especially in a time of a recession. Talking heads of CNBC can’t say anything bad about him.
However, I do like the guy. I think he is a brilliant conservative investor – and lives down to Earth still buying girl scout cookies from his community. That gets a good mark in my book not to mention all the money he has made in the past.
Today was proof that Berkshire has not been immune to the banking atmosphere. The Wall Street Journal has wrote in today’s paper:
Moody’s on Wednesday lowered the long-term issuer rating of Berkshire to AA2 from its top AAA rating. It cited the weakening economy and “severe decline in equity markets.” Berkshire has had big losses in its portfolio, which includes large financial companies such as Wells Fargo & Co. and American Express Co.
Mr. Buffett is weathering one of the toughest markets since he took over Berkshire in 1965. Its shares are down 33% over the past year. Further downgrades could impact borrowing costs, and hurt its ability to charge maximum rates for insurance policies written by its subsidiaries.
One of the companies most affected by the market downturn is Moody’s itself, whose stock has slid about 70% since early 2007.
I have not been a great fan of these rating agencies. They are usually overlooking major problems in the companies, and are usually too slow to react to a changing market. I think there is too much of a built in conflict when they are being paid by the same people they are suppose to be watching. This situation is no different. Birkshire owns 20% of Moody’s and I want to believe that it doesn’t make a difference in the timing of upgrades/downgrades and how severe they are.
Despite all of that, I was actually hoping to find a good dip the stock today (B shares of course) with the bad news, but with the good news out of Wells Fargo it was actually up today. I think people are just looking for any good news though, so I think we’ll get the dip yet this month in both WFC & BRK.B. Although I think Wells Fargo is one of the better bank stocks, I think they are just playing games to make their numbers look better by possibly just reserving less for their loan loss. The true test will be their next quarter.
Brent TickerNews Berkshire Hathaway, BRK.B, Moody's, Warren Buffet, WFC