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Apr-28-2008Buffett, Munger will again field shareholders' questions(topic overview)
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By late April, the new bond insurer had guaranteed more than $8 billion of municipal bonds, based on the net par amount, Moody's analyst James Eck told Reuters by telephone. Moody's, like Standard & Poor's Ratings Services, gave the new company, called the Berkshire Hathaway Assurance Corporation, its highest "AAA" rating. It was only in late December that billionaire investor Warren Buffett created the bond insurer, partly at the request of New York's insurance superintendent Eric Dinallo, who was trying to stabilize the troubled insurers that guarantee about half of the $2.6 trillion of municipal bond market. Several insurers faced downgrades because they expanded into risky mortgage-linked securities, and investors were fleeing the debt they guaranteed, seeking to avoid losses. "Berkshire Hathaway Assurance Corporation has rapidly grown its insured portfolio of U.S. public finance credits during a period of great stress in the credit markets," Eck said in a statement. "The company's sound financial profile and its affiliation with Berkshire give it a meaningful presence in the financial guaranty insurance marketplace," he added. A spokeswoman for Berkshire was not available to say whether the company had guaranteed new issues of municipal bonds in addition to the outstanding debt it began backing or whether it was capturing the high premiums Buffett said he would demand. [1] NEW YORK (Associated Press) - Moody's Investors Service on Friday assigned its top-notch financial-strength rating to the bond insurer established by Warren Buffett's Berkshire Hathaway.[2]
Berkshire Hathaway Assurance launched late last year to take advantage of credit problems other bond insurers were having, but it wasn't mentioned in Buffett's shareholder letter in February. Buffett has said the new bond insurance unit has already done a couple deals, but he hasn't offered many details.[3] Berkshire Hathaway Assurance Corp. was established last year to try and win business in the beleaguered bond insurance industry. Major bond insurers like MBIA Inc. and Ambac Financial Group Inc. have been in a tailspin for months as they scramble to protect their "AAA" ratings. Fitch Ratings downgraded both those companies.[2]
OMAHA, Neb. (AP) - Many Berkshire Hathaway shareholders at next Saturday's meeting will want to know more about Berkshire's new bond insurance business.[4] OMAHA, Neb. (AP) - Some of the questions Berkshire Hathaway CEO Warren Buffett faces at next Saturday's annual meeting may not be friendly.[5] OMAHA, Neb. (AP) — The wisdom of billionaires Warren Buffett and Charlie Munger will be on display again next weekend when the two men field questions from a throng of Berkshire Hathaway Inc. shareholders.[3]
WHEN billionaire investor Warren Buffett talks, I listen. Most of my fascination with the man comes from the way he made his billions--not by inventing some world-changing technology, but by sitting in his attic, sipping Cherry Cokes, reading everything he could get his hands on and investing in undervalued businesses through his company, Berkshire Hathaway. I look forward to Buffett's letter to Berkshire shareholders, track the company's stock investments and listen to interviews he gives.[6] At next Saturday's Berkshire Hathaway Inc. shareholders meeting, a group representing Native American tribes and commercial fishermen from Oregon and California is expected to again ask chairman Warren Buffett to order the removal of four Klamath River dams owned by PacifiCorp, a Berkshire Hathaway property.[7] A group representing American Indian tribes and commercial fishermen from California and Oregon will again try to pressure Buffett at the meeting to order the removal of four dams on the Klamath River owned by one of Berkshire's utilities so salmon can spawn again. For many people in the crowd, especially the ones who attend every year, the Berkshire meeting simply offers a chance to hear two master investors discuss their craft. "There's so much nonsense in the investment world in New York that it's always a good opportunity to go out and get our value investing batteries recharged," said investment fund manager Whitney Tilson, who founded T2 Partners LLC. Berkshire performed well last year even though its divisions linked to construction suffered along with the national housing market.[3] The group from the Pacific Northwest plans to protest outside the meeting and ask tough questions inside about PacifiCorp's dams, which are up for federal relicensing. Craig Tucker, spokesman for the Karuk tribe, one of four tribes fighting for dam removal, said the group feels like Buffett ignored their pleas at last year's meeting. "He and his sons and his family have refused to meet with us," Tucker said. When he was asked about the Klamath last year, Buffett said state and federal regulators would be the ones to decide whether the dams should be removed. Buffett said he cannot interfere in the operating decisions of Berkshire's PacifiCorp subsidiary, which serves 1.7 million customers in six Western states, because he swore he wouldn't in an affidavit submitted to Oregon utility regulators.[3] The dams are up for relicensing by the Federal Energy Regulatory Commission. Craig Tucker, spokesman for the Karuk tribe, said the group feels Buffett ignored their pleas at last year's meeting. When Buffett was asked about the Klamath last year, he said state and federal regulators would decide whether the dams should be removed. Buffett said he cannot interfere in PacifiCorp's operating decisions because he swore he wouldn't in an affidavit submitted to Oregon utility regulators. The tribes say removing the dams would be more cost effective than upgrading them to meet modern standards for fish protection.[7]
There's one person in this world well-equipped to answer that question: Buffett's longtime friend and business partner Charlie Munger. Happily for us, Charlie likes to talk -- and he addressed this very question last year. Munger's remarks at last year's Wesco Financial annual meeting are wide-ranging and worth reading in their entirety. He's smart, and he''puts his intelligence to good use. He has an unflagging interest in investing. He started learning about investing early, when he was 10. He's a "good learning machine," and he keeps on learning. He has enormous experience in the subject and practices daily. He's been rewarded for being a good investor. He's objective. If there's a common thread tying these factors''together, it's that Buffett (who does happen to be smart) found something he liked and has worked at it every day for a very long time. If you want to be like Buffett -- though you may never approach his $62 billion fortune -- start now, practice investing daily, and be objective in your decision-making. This is easier said than done. [8] All I did was read the annual report." After holding the shares for five years, Berkshire sold its PetroChina stake last year for $4 billion. Buffett's advice to most investors is to stick with low-cost index funds, and to buy them over time. "You just make sure you own a piece of American business, and you don't buy all at one time," he said.[6]
One of the ways Buffett learns so much is through reading. Munger told his audience last year, "If you had an observer. he would find that Warren spent most of his time sitting on his and reading." He advised further, "If you want to succeed, if you really want to be the outlier in terms of achievement, just sit down on your and read -- and do it all the time." In a recent Fortune interview, Buffett spoke to how he generates ideas: "I just read.[8] Fortune's article was titled "What Warren Thinks." It delved into Buffett's thoughts about current economic times. Given that Buffett has made a good deal of his fortune during times of panic over the past 50 years, it's well worth taking note of his thoughts.[6] Warren Buffett has made a good part of his fortune in times of economic crisis.[6]
As we gear up for lots of WBW coverage from Omaha, including real-time text blogging from Buffett's multi-hour question-and-answer session with shareholders next Saturday, May 3, we're asking you to help crown the "best" Warren Buffett Bite of all time.[9] Berkshire Hathaway Assurance launched late last year, but it wasn't mentioned in Warren Buffett's shareholder letter in February.[4] Buffett may even create some new Buffett Bites when he spends several hours answering shareholder questions at next weekend's big Berkshire Hathaway annual meeting in Omaha.[9]
The question-and-answer period, when Berkshire's chairman and vice chairman spend more than five hours responding to nearly anything, is usually the highlight of the meeting. Buffett and Munger will likely face questions about the credit crunch that has created turmoil in this economy, the new bond insurance business Berkshire launched, and who will run Berkshire after the 77-year-old Buffett is gone.[3] Berkshire has a "AAA" credit rating and a solid balance sheet. Buffett said in interviews around the start of the year that Berkshire's new bond insurance unit had already done a couple deals, but he hasn't offered many details.[4] NEW YORK (Reuters) - Berkshire Hathaway Inc's (BRKa.N: Quote, Profile, Research ) new municipal bond insurance arm on Friday captured its second top rating, this time from Moody's Investors Service, which cited its fast growth despite a credit crunch.[1]
Many shareholders want to know more about Berkshire's new bond insurance business.[3] Berkshire launched the bond insurance business to take advantage of credit problems other bond insurers were having.[4]
"I don't think you'll find anything dramatic on succession (at the meeting)," Kilpatrick said. To replace Buffett, Berkshire plans to split his job into three parts — chief investment officer, chief executive officer and chairman. In his letter, Buffett said the company's board now has three internal candidates for CEO and four external candidates who could take over managing the company's $75 billion stock portfolio and $44.3 billion cash. [3] Buffett has amassed a fortune in the stock market not by momentum investing or day trading, but by focusing on living, breathing businesses. He gets to know them and -- more importantly -- gets to know what he'd pay to own them. Then he waits until they fall into that attractive price range. Some of these picks -- like USG (NYSE: USG ) -- will get cheap because they face difficult operating environments. Others -- like Coca-Cola (NYSE: KO ) way back when -- will look cheap because Buffett thinks they can grow''more quickly''than the market thinks they can. In either scenario, Buffett is focused on the quality of the company and not its external circumstances. He told Fortune recently, "I don't invest a dime based on macro forecasts." As Wharton Professor Jeremy Siegel has written, "The basic principle of investor return. states that the long-term return of a stock depends not on the actual growth of its earnings but on how those earnings compare to what investors expected."[8] Because prices are just as important as prospects. That's not only why Warren Buffett is a better investor than you, but it also informs''the way''Fool co-founders David and Tom Gardner invest at Motley Fool Stock Advisor.[8] We know Warren Buffett is a better investor than the rest of us. His incredible long-term track record at Berkshire Hathaway, '' and his''avoidance of both the 2000 tech meltdown and the current subprime crisis, prove that.[8]
Berkshire shareholders will also be looking for more details about the company's plan to replace the 77-year-old Buffett. Andy Kilpatrick, the stockbroker-author of "Of Permanent Value: The Story of Warren Buffett," said he thinks there's already a solid plan in place.[3]
Check back with Warren Buffett Watch all week and weekend as we prepare for BuffettStock in Omaha.[9] Warren Buffett is known for the pithy, memorable, often funny, quotes that concisely capture the core of his wisdom on investing and life. Let's call them Buffett Bites.''''[9]
Fortune was granted access to a class Buffett gave in Omaha, Neb., to 150 students from the University of Pennsylvania's Wharton School. He frequently teaches classes to business students. [6] Whatever the problem, there are reasons why most of us will never be exactly like Buffett. We will all, however, be much better investors -- and make a lot more money in the process -- if we learn to emulate him just a little bit.[8] The first way to be like Buffett is to make some time to read, and read as much as you can.[8] Avid reading and an early start will go a long way toward helping you be like Buffett.[8]
On the current credit crisis: Buffett said the de-leveraging that's going on is "going to be painful" and will take time to work through. He doesn't buy stocks based on macroeconomic forecasts. Mortgage-backed securities were sliced up so many times that many banks can't possibly know exactly what they own. [6] Hence investors can't understand it either. (One note--Berkshire has been a recent buyer of U.S. Bancorp and Wells Fargo, which are commonly portrayed as two of the more conservative banks.) Stocks are cheaper now than they were a year ago, and hence a better buy than they were.[6]
To good success so far: Our picks are ahead of the S&P; 500 by 38 percentage points on average. If this is how you'd like to invest, or if you want to see our best stocks for new money, join us with a 30-day free trial.[8] Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms.[1]
Strong performances from some of Berkshire's other subsidiaries and investment gains helped the company generate $13.2 billion net income and $118.2 billion revenue in 2007. [3] Buffett talks about Berkshire's buying about $4 billion worth of auction-rate securities in the past two months. He talks about buying one security at an 11.3 percent yield, and the same day an identical issue going for a 6 percent yield.[6]
The company's book value — assets minus liabilities — per share has grown from $19 43 years ago to $78,008 under Buffett's leadership.[3]
About 30,000 people are expected to fill the Qwest Center Omaha arena Saturday for the Omaha-based holding company's annual meeting. [3] A group from the Pacific Northwest plans to protest outside the meeting, and ask tough questions about PacifiCorp's dams inside.[5] Members of 4 American Indian tribes and some commercial fishermen are fighting for dam removal on the Klamath River in California and Oregon. They're worried about the salmon population and water quality. This year, the Pacific Fisheries Management Council has already recommended closing the California coast and most of Oregon to salmon fishing.[5]
SOURCES
1. Berkshire Hathaway muni insurer wins 2nd top rating | Reuters
2. Moodys assigns "AAA" rating to Buffetts bond insurer
3. The Associated Press: Buffett, Munger will again field shareholders' questions
4. NTV - KHGI/KWNB/WSWS-CA - Where your news comes first. - Grand Island, Kearney, Hastings, Lincoln | Berkshire shareholders curious about new bond insurance business
5. NTV - KHGI/KWNB/WSWS-CA - Where your news comes first. - Grand Island, Kearney, Hastings, Lincoln | Buffett may face tough questions from protesters about Klamath dams
6. Fredericksburg.com - Panic can help wise investors
7. Tribes, commercial fishermen plan to attend Berkshire Hathaway meeting to demand removal of PacifiCorp dams on Klamath - Breaking News Updates from Portland and Oregon - The Oregonian - OregonLive.com
8. Warren Buffett Is a Better Investor Than You
9. Nominate Your Favorite Warren Buffett Bite - Warren Buffett Watch - MSNBC.com
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