Everything Warren Buffett Note: It is not that I have stopped posting Warren Buffett News, it is that nobody seems to be writing about him at the moment.
I will put some older interviews and lectures up latter.
Though 2008 was tough for Warren Buffett, Berkshire Hathaway (NYSE: BRK.B) is well-positioned for the year ahead, according to Paul Tracy in his StreetAuthority Market Advisor.
"For only the second time in the investment-based company's 44 years, Buffett saw the book value of Berkshire drop," Tracy says.
"Of course his book value decline of 9.6% should be put in context with the 37% loss incurred by the S&P 500."
Credit rating agencies Moody's and Fitch both downgraded Berkshire's "AAA" credit rating and S&P is looking to do the same, according to Tracy.
"And just for a little salt in the wound, Buffett was bumped out of the top spot on Forbes' list of the world's richest people, unseated by Bill Gates," Tracy says.
"In his annual letter to Berkshire shareholders, Buffett was candid about both his mistakes and successes in 2008. Of his mistakes, he listed taking a position in ConocoPhillips (NYSE:COP) when oil and gas prices were near their highs."
Of his successes he was pleased to lock in double-digit yielding fixed-incomes securities issued by Wrigley, Goldman Sachs Group Inc. (NYSE: GS) and General Electric Co. (NYSE:GE), Tracy notes.
Looking over Berkshire's holdings, Buffett should feel guardedly optimistic about the current year, he says. Berkshire's utility and insurance groups should continue to deliver outstanding results.
"Along with its fixed-income securities, BRK-B also received equity warrants -- and the Goldman Sachs warrants are already flirting with profitability."
"Key holding, Wells Fargo didn't escape the banking sell-off. But it was far more aggressive in writing off bad assets than its peers and it looks to emerge as one of the strongest in the industry."
Buffett does have a few challenging holdings, Tracy says. Shares of American Express Co. (NYSE: AXP) are still having trouble finding the bottom as the company contends with rising credit card delinquencies, according to him.
"Korean steel maker POSCO will ultimately benefit from infrastructure spending in China, but steel prices are still continuing to decline -- down more than -50% off their July 2008 high."
Another minor headwind for Berkshire is marginally higher borrowing costs, according to Tracy. "Although Moody's and Fitch only lowered Berkshire's "AAA'- rating down by a single notch, the loss of its pristine credit rating will slightly increase the rate at which Berkshire can secure credit.
"Buffett may be disappointed with last year's results, but we still feel that beating the S&P by more that 25 percentage points is nothing to be ashamed of.
"On par, Berkshire's portfolio looks well-positioned for the year ahead. We will continue to like BRK.B at current prices and continue to hold the stock in our 'undervalued gems' model portfolio."
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