‘A’ SHARES FALL TO 5-YEAR LOW AHEAD OF RESULTS, BUFFETT LETTER
Investors in big banks have been measuring losses in nickels and dimes most days - big percentage losses for the most-hamstrung names in the group. But in actual cash terms, a bad day amounts to less than it costs to buy a newspaper, on a per-share basis.
Holders of the class A shares of Berkshire Hathaway (BRKA) have suffered the opposite experience, but often the same result. A bad day - like today - can see them surrender $3000 a share in value, but realize more like a 3% decline.
Nevertheless, like a financial company with some toxic assets or a sagging investment portfolio, Berkshire Hathaway has traded at a multi-year low - currently commanding just over $75,000, the cheapest it’s been since October 2003.
Berkshire’s market value has been cut in half from its December 2007, when it reached $151,000 a share (again, speaking of the class A shares) after an exceptionally profitable quarter stoked investors’ enthusiasm for Warren Buffett’s legendary investing acumen.
What followed, however, proved to be four quarters of declining profits, culminating with the November report of third-quarter results showed $1 billion of unrealized investment losses. Berkshire recorded $1.26 billion in losses on derivatives contracts keyed to the performance of equity markets.
Investors expect that the fourth-quarter results, which could come out next week, will show more of those losing bets on world stock markets, which could results in more write-downs.
Buffett’s letter to shareholders - a missive held in the same awed regard as the Oracle himself - could come out after the close of next week’s trading action, and investors will be looking to divine clues as the chairman’s outlook for investments ahead.Related Links
Political Animal - New Zealand Politics
Share Investor Blog - Stockmarket & Business commentary
Share Investor New Zealand Business News- Get more business news
Shareinvestorforum.com - Discuss this topic further
Recommended Amazon Reading
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $10.74
Usually ships in 24 hours