Is The Party Over For Warren Buffett And Berkshire Hathaway?

The graphic below appeared in a USA Today Story in June 2008 about Warren Buffett and his achieving Rock Star Status. You can see the long term returns on his class A shares. Nothing goes up forever.

Source

I was watching the insurers ‘getting killed” for several weeks and I pondered about Berkshire Hathaway ((BRK-A), (BRK-B)), an insurance company. How is it doing in this credit debacle? Everyone seems to have given up at least 1 or 2 pounds of flesh. We haven’t heard too much about Warren Buffett, other than how smart and sophisticated he is, The Oracle of Omaha, although, lately we’ve seen a bit too much of him. He’s been lobbying on CNBC for the passage of the bailout bill, buying GE (GE), Goldman Sachs (GS); he’s desperately trying to hold together the empire. I contend that it’s getting harder and harder every day.
Is it possible that Buffett got too greedy? Why didn’t he cut back at the top in 2007 ? He could’ve “lightened up” a bit. He could’ve kept the major share of his holdings.

Every dog has its day

Berkshire Hathaway’s day of reckoning could be just around the corner. Below is the Buffett Portfolio as of 6/30/2008. When you look at the vastness of his holdings and then think about the carnage in price decline on most of his issues, you cannot help but think of the losses that Buffett has already sustained.

This is only the equity portfolio. In addition to this equity portfolio, Buffett must also have vast fixed income holdings that have all gotten crushed as well. There was some news out today that he was selling puts on Burlington Northern (BNI). He’s willing to purchase more at a given price, but is also trying to take advantage of the bloated put premiums, given the volatility in the marketplace over the last couple of weeks. Things have been extraordinarily great for Buffett for years. I wonder if things are starting to turn here or if it’s just another temporary blip in his continued accumulation of largesse.

Some of the names that really jump out are Bank of America (BAC), Comcast (CMCSA), GE, Home Depot (HD), Lowe’s (LOW), Moody’s (MCO), SunTrust Banks (STI), Unitedhealth (UNH). Most of his wealth has to have taken a serious beating over the past two weeks. It will be interesting to see how it works out for him or if he’s able to recover and hang on through this tumultuous time.

Posted in Categories: Contributor, External Research, Stocks, USA.

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