Continue reading Berkshire Hathaway Rises on Buffett's Outlook and Q4 Earnings

Berkshire Hathaway Rises on Buffett's Outlook and Q4 Earnings originally appeared on BloggingStocks on Mon, 28 Feb 2011 13:30:00 EST. Please see our terms for use of feeds.

Continue reading Stocks in the news: GM, F, RIMM, BAC, CEG, FCX, MRVL, GS, IFX, BBBY, MOT ...

Stocks in the news: GM, F, RIMM, BAC, CEG, FCX, MRVL, GS, IFX, BBBY, MOT ... originally appeared on BloggingStocks on Wed, 03 Dec 2008 08:11:00 EST. Please see our terms for use of feeds.

Book Review: The Snowball: Warren Buffett and the Business of Life originally appeared on BloggingStocks on Wed, 22 Oct 2008 16:26:00 EST. Please see our terms for use of feeds.

Warren Buffett's official biography available for pre-order - all 976 pages of it originally appeared on BloggingStocks on Tue, 12 Aug 2008 17:22:00 EST. Please see our terms for use of feeds.

This Bud may not be for Anheuser-Busch Cos. (NYSE: BUD) for much longer.

InBev, the Belgian mega brewer, has told the King of Beers that it won't wait forever for it to make up its mind about whether to accept its unsolicited $46.3 billion offer. In the third and probably not the last letter to Anheuser-Busch CEO August Busch IV, InBev CEO Carlos Brito points out that his company's offer, which represents an 18% premium on its all-time high in 2002, is a generous one.

"The market reaction to our proposal has been extremely positive," Brito writes. "We believe this confirms our view that our proposal is the best way to achieve this transformational combination for all constituents."

InBev has already lined up financing for its $65 per share offer and has even paid about $50 million in commitment fees to its bankers. Budweiser's long-time headquarters in St. Louis will be maintained as will its senior management team. It does not get any better than this for a company about to be acquired.

Continue reading Anheuser-Busch feels the heat from InBev

Anheuser-Busch feels the heat from InBev originally appeared on BloggingStocks on Wed, 25 Jun 2008 11:50:00 EST. Please see our terms for use of feeds.

After five months of tracking my 2008 picks, it is rewarding to finally have a breakthrough -- topping the three major stock indices and Berkshire Hathaway (NYSE: BRK.B) too. It has been painful to have to report each month that I was being bested. However, since I have not seen anything contradicting my original rationale for my eight picks I stood my ground.

This past month saw great improvement. For the first time since I posted the original story Chasing Value: Final list -- 8 stocks for 2008, five of the eight stocks are up:

Moving into positive territory by pennies was Loews Corporation (NYSE: LTR). Among its holdings is a 51% stake in Diamond Offshore Drilling, Inc. (NYSE: DO) that has been doing well as the world remains desperate for more oil and natural gas.

Bunge Limited (NYSE: BG) was the other stock to cross the line into the black, while Valero Energy Corp. (NYSE: VLO), although improving, remains my worst performer. It is still down almost 28% after five months.

The gap between the Dow Jones Industrial Average, Standard & Poor's 500 Index and the technology heavy NASDAQ Composite Index narrowed substantially so that the three are tracking each other very closely. Stocks like Apple, Inc (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG) continue to gain significantly and their outlooks have not been shaken amid overall pessimistic economic forecasts.

Continue reading Chasing Value: 8 stocks for 2008 -- May beats all

Chasing Value: 8 stocks for 2008 -- May beats all originally appeared on BloggingStocks on Mon, 02 Jun 2008 13:01:00 EST. Please see our terms for use of feeds.

Warren Buffett still bullish on the United States originally appeared on BloggingStocks on Thu, 22 May 2008 11:02:00 EST. Please see our terms for use of feeds.

Just days after the fifth anniversary of George W. Bush's landing on an aircraft carrier in front of a "Mission Accomplished" banner, the Weapons of Mass Destruction (WMDs) have finally been located. But not in Iraq or Iran or Syria.

These WMDs are of the financial variety. The ones against which Berkshire Hathaway Inc.'s (NYSE: BRK.A) CEO Warren Buffett railed in his 2003 annual report. There he called derivatives "financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal." And Reuters reports that these are the very financial WMDs that cost Berkshire $1.7 billion in charges in the first quarter of 2008.

This proves that George W. Bush was right and so was Warren Buffett. But Berkshire shareholders are also smarting due to a 64% drop in its net income and a 24% tumble in its revenues.

Continue reading Buffett struck by $1.7 billion worth of financial WMD losses

Buffett struck by $1.7 billion worth of financial WMD losses originally appeared on BloggingStocks on Fri, 02 May 2008 21:04:00 EST. Please see our terms for use of feeds.

Continue reading 'All My Children' goes billionaire: Warren Buffett to come to Erica Kane's rescue in May episode

'All My Children' goes billionaire: Warren Buffett to come to Erica Kane's rescue in May episode originally appeared on BloggingStocks on Wed, 19 Mar 2008 18:22:00 EST. Please see our terms for use of feeds.

Warren Buffett pulls bond reinsurance plan off the table originally appeared on BloggingStocks on Mon, 03 Mar 2008 10:10:00 EST. Please see our terms for use of feeds.

Bloomberg News reports that Warren Buffett offered to reinsure $800 billion worth of municipal bond liabilities for MBIA Inc. (NYSE: MBI) and its other bond insurance peers. Why is Buffett doing this? He sees distressed companies in desperate need of capital and he thinks he can provide it at a bargain price.

The bond insurers are under severe pressure because they stretched outside of their comfort zone thanks to their desire to make more money by insuring subprime-linked securities. Those bad bets now threaten their credit ratings and their future. But the risk in their municipal bond portfolio is probably much less severe. So Buffett sees a chance to profit from their distress to take a relatively low risk bet that the non-payment of municipal bond principal and interest will cost him little.

Buffett's Berkshire Hathaway Inc. (NYSE: BRK) would put up $5 billion as part of the plan. The bond insurers lend their AAA rating to $1.2 trillion of municipal debt, the rankings of which would be thrown into doubt if they were downgraded. If the debt was reinsured by AAA rated Berkshire, the municipalities would also retain the top rating.

So the deal would work out great for Buffett and the municipalities while the bond insurers will give up some of their future profits to Buffett who is using his higher credit rating to extract value for his shareholders. And if the bond insurers can forestall a ratings downgrade, it will be beneficial to their shareholders as well.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Why Buffett wants to reinsure the bond insurers originally appeared on BloggingStocks on Tue, 12 Feb 2008 09:44:00 EST. Please see our terms for use of feeds.

A few days behind schedule, but here is my list of eight stocks. Included in the list there are two holdovers from the 2007 list of seven stocks. I do not see any value in creating an entirely new list when I have done well over the years riding the winners. This is particularly true if the reasons you bought the stock in the first place remain valid.

These eight picks for the year will be tracked monthly with updated results. The initial share prices are from December 28, 2007. They are focused on defense, energy, food, gold, metals, mining, oil, power, and every one pays a dividends. The following are my "Quick Takes" in alphabetical order with links to the complete stories.

Anglo American plc (ADR) (NASDAQ: AAUK) is a world-class player in precious metals, diamonds, and commodities, which are all growing in demand. When the world economy is booming, all of its mining products are sought after, and when the market runs scared, gold goes up. It pays a dividend yield of 1.9% and is trading almost 25% off its 52-week high. For full story: Chasing Value: Anglo American diamonds and gold are your best friend. The closing price on December 28, 2007, for AAUK was $30.79.

Continue reading Chasing Value: Final list -- 8 stocks for 2008

Chasing Value: Final list -- 8 stocks for 2008 originally appeared on BloggingStocks on Sat, 05 Jan 2008 15:10:00 EST. Please see our terms for use of feeds.

Continue reading Before the bell: Futures higher following bank news, ahead of housing data

Before the bell: Futures higher following bank news, ahead of housing data originally appeared on BloggingStocks on Fri, 28 Dec 2007 07:48:00 EST. Please see our terms for use of feeds.

Continue reading Before the bell: Futures higher despite some retail reports

Before the bell: Futures higher despite some retail reports originally appeared on BloggingStocks on Wed, 26 Dec 2007 07:47:00 EST. Please see our terms for use of feeds.

Christmas is as good a time as any to announce a deal I suppose, and buying a conglomerate consisting of 125 manufacturing and service companies is probably Warren Buffett's preferred means of celebrating.

For $4.5 billion, Berkshire Hathaway (NYSE: BRK.A) will get 60% of Marmon Holdings, with plans to acquire the rest over the next 5 or 6 years at a price to be determined by the company's future profitability. According to the press release, the company's operations are pretty diverse:

Continue reading Berkshire Hathaway buys 60% of Marmon Holdings

Berkshire Hathaway buys 60% of Marmon Holdings originally appeared on BloggingStocks on Tue, 25 Dec 2007 19:30:00 EST. Please see our terms for use of feeds.

Barron's [subscription required] cover story suggests that Berkshire Hathaway Inc (NYSE: BRK.A) is overvalued. I think the stock has been rising because money is looking for a safe haven in today's volatile market. And Barron's is right to get people thinking about how safe that haven is as Warren Buffett's years as CEO draw to an inevitable -- and sad -- close.

Berkshire's market value is very high. It hit a record $151,650 last week and now has a stock-market value of $220 billion. But it's pricey -- based on several valuation measures, Barron's thinks it's worth $130,000 a share -- about 10% below the current quote. Here are two of those methods:

• Price/book. Currently, Berkshire's ratio of market value to book value -- its assets minus its liabilities -- is at 1.8 times its September 30 book value, of $77,800 a share. That's above its average of 1.6 in the past five years. It's also valued at 23 times estimated 2007 operating profits of $6,300 a share. 2008's profits are expected to be similar to this year's. If Berkshire were valued at 1.7 times book value, a premium to its five-year average, the stock would trade at $132,000.
• Insurance on book value, others businesses on profits. Some analysts value Berkshire by assessing its insurance units on book value and its other businesses on profits. Using this approach, Barron's came up with a value of about $130,000 a share. This calculation used a price/book ratio of 1.7 on Berkshire's insurance units' estimated September 30 book value. Barron's assigned a price/earnings multiple of 15 to projected 2008 operating profits of $2,800 a share for the non-insurance businesses.

Continue reading Barron's: Berkshire Hathaway is 10% overvalued

Barron's: Berkshire Hathaway is 10% overvalued originally appeared on BloggingStocks on Sat, 15 Dec 2007 08:35:00 EST. Please see our terms for use of feeds.

Eight for 2008:

• Berkshire Hathaway Inc. (NYSE: BRK.B) is a strong candidate. It meets two of the three criteria in a big way. Although it does not pay a dividend, most of its stock holdings do and Warren Buffett has been the gold standard for creating shareholder equity. If 2008 proves to be a shaky year on Wall Street, you will want to own this stock. BRK.A/B has been appreciating but given all the uncertainty in the market I will stick with this solid company.
• Intuitive Surgical, Inc. (NASDAQ: ISRG) is also a strong candidate that I have written about many times. It does not pay a dividend, but this one has beat everybody and everything every year since I bought it, and is likely to do it again. It has hardly penetrated its potential market. It is significantly off its all-time high, and may look like a bargain by December 28. My regular readers know I love this stock but it has gone back up from about $280 to $320 and by the 28th may not be much of a value.
• Huaneng Power International, Inc. (ADR) (NYSE: HNP) does pay a sizable dividend and has plenty of room to run. It has come down a lot with the rest of the inflated Chinese stock market, but this one is not threatened by competition and is a good long-term value. The largest potential downside might be costs associated with environmental clean-up. China is addressing these issues but has a long way to go. This is a must own and with all the stories about electric cars and more devices requiring power all the time plus its recently soft price I still favor HNP. It still has a 3.6% yield, and is increasing equity every day.
• The Dow Chemical Company (NYSE: DOW) has done well this year but not spectacular. It meets my criteria for consideration on all counts and has a lot going for it. In partnership with Corning, it is developing materials for the solar energy industry. It will probably continue to be mentioned in merger and acquisition rumors, and it has historically been an innovator willing to spend on R&D. If oil goes down in price, the primary ingredient in many of DOW's products will create improved margins. A P/E of 10 and a 4% yield, need I say more?
• Duke Energy Corporation (NYSE: DUK) (NYSE: SE) will remain on the possibility list for now. It pays a handsome dividend and might see some growth next year as investors look for stability. This year it was flat. That might be good enough if the market ends in turmoil next year. Yes there is room for two power companies on my list and this one is paying a solid 4% yield.
• The Home Depot, Inc. (NYSE: HD) was one of my dogs this year (and continued to report poor earnings) but there is value here and this year going forward it is greater than last year. There are a number of latent problems at HD, but at current prices there is also deep value. I still think HD is a buyout candidate now more than ever, but whether the stock recovers in 2008 or deep into 2009 remains a question.
• Valero Energy Corporation (NYSE: VLO) was one of my favorites last year, remains one of my favorites now and is a very strong candidate to stay in favor next year. Its margins have been squeezed lately by high crude prices and stable pump prices, but that could change, and the stock may appreciate significantly in 2008. I have no idea what Wall Street is thinking but it still seems too cheap with a P/E just over 7, a P/S of 0.34 and still no one seems to be building any new refineries.
• General Dynamics Corporation (NYSE: GD): The price-to-sales is a low 1.26 and the P/E is average. It makes the Gulfstream aircraft for the wealthy jet-setter and the Abrams tank for the military. How many of those will need parts or replacement in the coming years? See Chasing Value: General Dynamics (GD) looking long and flying high!
• Northrop Grumman Corporation (NYSE: NOC) sports an even lower P/S of 0.81 and a lower P/E too, of 15.25. It has a higher dividend yield than General Dymanics and a P/B of 1.57, which seems to low. Another defense contractor adding new contracts every week.
• Anadarko Petroleum Corporation (NYSE: APC) is one of my favorite stocks. It is in the right business at the right time, and it has substantial proven reserves in North America. I see APC as a perpetual takeover target, but it has been successful as a stand-alone and can remain so. The stock price is about 5% off its 52 week high but the P/E is still under 7 so I am bewildered as to why some larger fish has not swallowed this one whole just for it's North Amercian reserves.
• Anglo American plc (ADR) (NASDAQ: AAUK) is another stock that could end up in M&A discussions. Let's see, it's a global player in diamonds, gold, silver, platinum, coal and more. This is a currency play, a commodities play, a global play, and an inflation hedge - got to love that if you can get it at the right price. Unlike oil prices which may be affected by the weather, new technologies, or alternative sources these commodities will remain in demand. Gold may be used instead of silver, platinum instead of gold but except for locating new supplies the demand for these precious metals and commodities can only grow with the growth of the new economies and the wealth of their citizens.
• Nucor Corporation (NYSE: NUE) is one of the world leaders in the idea of mini-mills. This smallish steel producer prides itself on running a tight ship, pays a dividend, and has a P/E around 10. Once again, it could be a takeover target as the industry continues to consolidate. It is 25% off its high, and is a strong candidate to make the final cut. Still looks like a winner but not as much so given it's recent rise. Maybe someone is actually reading my rants?
• Reliance Steel & Aluminum (NYSE: RS) processes and distributes more than 100,000 products made of carbon, alloy, stainless, and specialty steel, as well as aluminum, brass, copper, and titanium. It serves more than 125,000 customers. For reasons that I will explore in future stories, the entire steel industry seems to be on sale and perhaps priced for a recession. Reliance has a P/E of 9.6 and a PEG ratio of 0.71, so unless there is something here that is well concealed, it seems way too low. My opinion has not changed but I wish RS would raise it's meager dividend of .63%. That might affect my decision if it becomes a close call.

Holiday shopping? Buy stocks, not clothes: The short list originally appeared on BloggingStocks on Fri, 30 Nov 2007 19:05:00 EST. Please see our terms for use of feeds.

Warren Buffett not buying CarMax after all -- Are markets efficient? originally appeared on BloggingStocks on Tue, 20 Nov 2007 11:30:00 EST. Please see our terms for use of feeds.

Warren Buffett says China is too hot -- Time to short JRJC? originally appeared on BloggingStocks on Fri, 26 Oct 2007 11:39:00 EST. Please see our terms for use of feeds.

Speaking on Rupert Murdoch's new Fox Business Network, Warren Buffett said that he wasn't interested in Bear Stearns (NYSE: BSC), Countrywide Financial (NYSE: CFC), and had also liquidated Berkshire Hathaway's (NYSE: BRK.A) entire stake in PetroChina (NYSE: PTR).

For the full story with quotes from Buffett, check out this piece from Bloomberg.

It's no surprise that Buffett "didn't come close" to taking a position in Countrywide Financial, as such a move would have been a sign of a seismic shift in his investment philosophy. Had Warren Buffett bought Countrywide, I probably would have done a post "Is Bill Gates' bridge partner getting senile?"

When looking to make acquisitions, Buffett typically looks for two things: competent management and honest management. Countrywide's dwindling stock price speaks volumes about management's competence, and the SEC investigation of CEO Angelo Mozilo's stock sales tells you a lot about management's honesty.

Warren Buffett took a pass on Countrywide. If he can find something better, so can you.

Warren Buffett denies interest in Bear Stearns and Countrywide Financial originally appeared on BloggingStocks on Sat, 20 Oct 2007 11:40:00 EST. Please see our terms for use of feeds.