Category Archives: warren buffett
Just yesterday, we mentioned how Warren Buffett lost a little more than $1 billion on his IBM investment at the opening bell. Unfortunately, things also took a turn for the worse today and he dropped an additional $1.09 billion due to another one of his favorite companies.
On Tuesday, Coca-Cola posted third-quarter earnings revenue and fell short of current expectations. They even warned of further currency headwinds. Because of this, Coca-Cola shares dropped significantly in value and Warren Buffett and Berkshire Hathaway have so far lost $1.5 billion on their investments.
Shares of Coca-Cola are the second-largest investment in the Berkshire Hathaway portfolio. They have been one of his longest held holdings and have been part of the portfolio for decades. He left the board of Coca-Cola in 2006, but in 2010 his son Howard took his seat.
At this time, Berkshire Hathaway owns 400 million shares. At one point, shares of Coca-Cola were down $2.72, causing the loss of $1.09 billion. When you add that to the loss yesterday that closed at $494 million – Buffett got more than half of his money back – we’re talking $1.5 billion worth of losses taking place in the last two days. It’s obviously been a rough week for Warren Buffett, but unfortunately for him it’s only Tuesday.
In April, in an interview on CNBC, Buffett said “I love Coke. I love the management, I love the directors.”
Anyway, that’s about all for now. Buffett has suffered a rough week so far, but the Oracle of Omaha will bounce back. He always does.
In general, Warren Buffett is not a big fan of losing money, so dropping $1 billion on Monday morning before lunch certainly should not sit well.
This morning, shares of IBM dropped significantly on weak earnings results, and this cost Warren Buffett dearly. The stock price dropped by $15.05 at the opening bell, and as of June 30, according to recent SEC filings, Berkshire Hathaway owns around 70.2 million shares of the tech company.
Based on those figures, this decline will cost Berkshire Hathaway and Warren Buffett $1.06 billion. It may be a drop in the bucket for Berkshire Hathaway, but it’s still a noteworthy amount of money to lose.
Before a another weak earnings report last April, Buffett mentioned on CNBC that he hadn’t “soured” on IBM, and even mentioned that he had not sold a share and actually purchased more shares in 2014.
At the time of this writing, IBM is the third-largest holding in the Berkshire Hathaway portfolio, trailing only below Wells Fargo and Coca-Cola.
Ginni Rometty, CEO of IBM, dismissed the idea that the tech company is about to split up, even though it is so large in size, and the fact that it is such a large tech company and the miss in Monday the earnings report.
“There is no doubt that marketplace speed has increased,” she said in an interview on CNBC. “We have a very clear strategy about how to take this company to the future.”
People with even just a slight interest in the business world are very familiar with the folksy wisdom and grandfatherly message of the Oracle of Omaha, Warren Buffett. And Berkshire Hathaway, his long-time investing company, is becoming a household name more and more each passing year. Yet, relatively speaking, the brand that is Berkshire Hathaway has stayed behind the scenes for the most part.
But the Financial Times have released a new report that highlights that things are starting to change. A range of acquisitions and existing Berkshire Hathaway subsidiaries are beginning to rebrand, and the overall focus of the affiliation is all about Warren Buffett and the Berkshire Hathaway impeccable reputation. Consumers will soon increasingly think of Berkshire and Warren Buffett when they shop for cars, homes and even when they take a look at their utility bills.
Earlier in the month, Berkshire Hathaway made an announcement that it was going to buy Van Tuyl Group, an auto retailer that boasts being the fifth largest in the nation. This new acquisition is going to be named Berkshire Hathaway Automotive. This newest branch spans across 10 states and has 78 locations. And as we all know, this number is set to grow as time goes by. Warren Buffett, as you can imagine, has plans to purchase more dealerships and will add them to the Berkshire Hathaway brand in the future.
Meanwhile, Prudential Real Estate has already put over 1000 agencies under the brand known as Berkshire Hathaway HomeServices. In 2011, the two companies came up with a striking franchising deal. And in typical Warren Buffett fashion, the real estate arm of Berkshire Hathaway is also expanding, both internationally and in the United States. The company has further plans to pursue licensing deals in Asia and Europe, as well as other markets in America.
Berkshire Hathaway and its trademark might be visiting your home very soon, depending upon where you happen to live. PacifiCorp and MidAmerican Energy, two utility companies serving the Midwestern and Western markets, recently were renamed Berkshire Hathaway Energy and have the same logo.
Why is Buffett suddenly pushing so hard into the market? According to analysts, the Buffett celebrity has significant value. When monetized correctly, it can add additional business to the fold. “Like Virgin reflects Sir Richard Branson’s rebelliousness and Apple reflects the genius of Steve Jobs, Berkshire Hathaway has brand equity around trust, stability and integrity,” said Oscar Yuan, one of the partners at Millward, Brown Vermeer, as he explained to CNBC.
Ironically, many consumers are already attached to a number of the Berkshire Hathaway brands, although they might not realize it. Afterall, the company is the parent of such successful organizations as Benjamin Moore, Brooks running shoes, Fruit of the Loom, Geico, Heinz and Spalding, the sporting equipment company. And not only that, but the Berkshire catalogue extends to engagement rings, sweets and military apparel.
No matter what way you spin it, we’re all customers of Warren Buffett. All of a sudden, it seems that he finally wants us to know it.
It seems that Warren Buffett is on his way to completely pulling out of Tesco, after acknowledging that his investing in the supermarket chain in Britain was a major mistake.
When October began, Buffett and Berkshire Hathaway owned a total of 3.97%, but there is an understanding that Buffett plans to reduce his share amount to below 3%.
This decision was made at the end of a period of trouble for the British supermarket chain. At this time, share prices are at their 11 month low.
Since the company made an overestimation of their profits by £250 million, 10 of the senior executive of the corporation have either been asked to leave or they have resigned. At this time, a forensic accounts investigation is hurting the company, and the laptops of the some of the senior executives have been confiscated for investigative purposes right at the beginning of the holiday season, when the business is extremely busy.
Buffett first invested in Tesco back in 2007. Since that time, he has lost over $700 million worth of his investment, according to CNBC last September.
Things are looking good for Warren Buffett and his stock pickers. He plucked them from obscurity, but they are now managing billions of dollars worth of Berkshire Hathaway’s money.
Todd Combs and Ted Weschler control more than $14 billion worth of Berkshire Hathaway’s money, and in the future they could eventually manage much more as part of the succession plan put forth by Warren Buffett. A Fortune magazine analysis tells us that Weschler and Combs have accomplished the difficult mandate to beat the S&P 500. This is the benchmark that their pay is directly tied to over a three year time period.
Over the last four years, Combs has generated a return of more than 116%. This is over twice as much as the 55% gain that the S&P 500 index has seen during the same period. We learn this according to estimates from Fortune.
In the last year, Combs has increased his portfolio by 51%. And in the three year timeframe for Weschler, his portfolio has risen by 81% and is well ahead of the market this year.
Weschler and Combs chose not to comment to Fortune. Buffett mentioned to the magazine that Weschler’s performance has far exceeded his estimates.
Buffett tells us that Lebron James is more savvy about money than Buffett was when he was his age. Whether Lebron James is actually better with money than the Oracle of Omaha is difficult to say, but he is most likely wealthier than Buffett was at 29 years of age. One important thing to note about the value investor strategy from Warren Buffett is that it takes time to develop and turn into riches. But Buffett and James definitely have one thing in common, and that is discipline.
Value investing requires a great deal of patience, dedication and persistence. So is a long career in the NBA. This summer, Lebron James lost a great deal of weight on the paleo diet, and most people felt that he did it in order to get ready for the upcoming basketball season. He said that it wasn’t the reason. He said that he did it because it’s good for life in general, and how you handle things.
Most recently, Lebron set everybody straight at a media event for the Cleveland Cavaliers, saying that the weight loss “had nothing to do with basketball. I should have wrote a letter about that to stop the speculations.”
The Lebron James weight loss, plainly and simply, was about discipline. He challenges himself every summer to do something “outside the box” he said, and this year it was all about diet. James reported that “in the process I lost some weight.”
This is very similar to the way that Warren Buffett challenges himself to make strong decisions about quality companies that seem likely to last – and in the process, Buffett became a billionaire.
Warren Buffett, billionaire investor, said recently on CNBC that he purchased stocks during the big selloff that took place recently.
He would not name any names. He would not say if he was adding to his current holdings. But he described the stocks that he purchased during an interview on “Squawk Box” as being “names that you’d recognize.”
Buffett said that he likes to purchase stocks when they are going down, not when they rise up. “The more [the market] goes down, the more I like to buy.” He also added that trying to predict the timing of the market by buying and selling individual stocks is quite often a “fool’s game.”
Buffett said that any investor who has owned a cross-section of businesses in America has done very well for the past 10 or 20 years. Values do appreciate over time – but not for every single stock, he said, adding that during his lifetime the Dow Jones Industrial Average was below 100.
With all the Wall Street talk going on about when and about how much the Federal Reserve will begin to increase interest rates, Buffett mentioned that the moves of the central bank have no bearing whatsoever on his overall investment strategies. “I really don’t care about whether the Fed is going to raise interest rates.”
Buffett mentioned that he purchases businesses that he feels will be good for the next 50 years – such as the deal that he announced during his interview on CNBC where he said that he is going to buy the largest privately held car dealership group in the nation, the Van Tuyl Group.
The Capitulation at Coca-Cola
Another topic of conversation was when Buffett addressed the newly overhauled executive compensation plan at Coca-Cola, saying in that it “makes great, great sense.”
Earlier in the year, Warren Buffett chose not to vote on the controversial equity compensation plan at the beverage maker, and he called it “excessive.”
But after some tweaks were made that shift it around compensation toward cash focused payments and away from stock options, Buffett said that this newer plan is “totally logical from a shareholder standpoint and from the standpoint of motivating employees.”
David Winters, activist investor and the chief executive officer of Wintergreen Advisers, spoke out against the original plan from Coca-Cola and pressured them to change it. Winters told “Closing Bell” on CNBC, “This new release is an improvement. But there’s more to go to improve Coke’s margins.”
Buffett then spoke about Burger King’s plans to acquire Tim Hortons, based out of Ontario, Canada for around $11 billion. This will create a new company that is based in Canada, but the deal has nothing to do with a necessity or desire to pay lower taxes.
Buffett is going to help fund this deal by providing $3 billion of preferred equity financing.
“Most inversion deals have a big tax motivation, but this one didn’t,” said the boss of Berkshire Hathaway.
He told us that the highest federal tax bill of Burger King in recent years was only $30 million. If Burger King chose to borrow money and move Hortons to the United States, it would spend a lot more than that, said Buffett.
Buffett chose not to comment on whether he agrees with Pres. Barack Obama about tax inversions deals being unpatriotic.
But he did mention that he believes that we should change the US corporate tax code so that companies in America would not have such a major disadvantage on the world stage. Many of the European countries and elsewhere have lower business taxes when compared to the United States.
When it comes to picking where he should invest, the stock market, according to Warren Buffett, is a no-brainer. On CNBC last week, Warren Buffett made an appearance and said that the current interest rates, i.e. the 10 year US Treasury bond at 2.42%, is not that enticing to him.
“I don’t start salivating, let’s put it in that way,” said Buffett.
He is definitely not excited about lower interest rates, but he doesn’t particularly mind them either: they keep the stock market strong and push prices much higher.
“Everything is a function of interest rates,” said Buffett. “Interest rates are like gravity.”
What Buffett may mean is that, since gravity is a constant, interest rates always have an effect on different sectors of the economy. As far as the stock market is concerned, low interest rates mean that people are investing in it more. This broader demand for high-quality stocks raises the value higher, and this helps grow investors’ portfolios.
When interest rates stay around near 0%, according to Buffett, assets are worth much more.
“Every asset, at present value, is worth the cash it will return before its termination date,” said Buffett.
But the inverse of that statement is also true. When interest rates go up, investors that are risk-averse will take their money out of the stock market and deposit it instead.
“If interest rates were 10%, all of our stocks would be worthless,” said Buffett.
As usual, the overall deciding factor for Warren Buffett had nothing to do with what the market is doing, but the confidence that he has in the businesses in which he invests in.
“If you told me the stock market was going to go down 500 points next week, I would’ve bought those businesses anyway,” said Buffett.
Warren Buffett, billionaire investor, said on Monday that the White House’s actions limiting companies from shifting their tax address outside of the US offers a good “time out” to come up with a plan to revamp the current corporate tax rules.\
“It’s good to have a time out while we work out a logical corporate tax code,” said Buffett in an exclusive interview for Politico’s “Lessons from Leaders” series with John Harris, editor-in-chief for Politico.
Buffett, longtime backer of the Democrats, who also backed Pres. Barack Obama, responded to a question in regards to recent rules from the Treasury Department that will curb so-called tax inversions – where a corporation will move their tax base overseas, usually by buying a smaller rival company. In recent months, a number of companies have looked at these deals, including Walgreens, Burger King and Pfizer.
Berkshire Hathaway, investment company founded by Warren Buffett, provided Burger King, based out of Miami at the time, with financing to complete their bid in order to merge with Canadian doughnut and coffee chain Tim Hortons. Burger King intends to use this merger as a way to move its tax base to Canada. They will be able to take advantage of Canada’s comparatively low corporate tax rate at 15%.
Buffett said that Senators Orrin Hatch of Utah and Ron Wyden of Oregon– the United States’ top tax writers in the Senate – now have a chance to move forward with this reform. Buffett also warned that if the rewrite avoids adding to the current deficit, there are going to be companies that will have to pay more, so there will be severe opposition to the change.
“Now if it’s revenue neutral, I guarantee you that there will be a lot of corporations that will therefore pay more and they’ll be on K Street like Occupy Wall Street.”
Warren Buffett has been quite critical of the US tax code in regards to under taxing the wealthy. He most famously talks about how his secretary pays a higher tax rate than he does. He was naturally criticized as a hypocrite in the wake of the recent crackdown of the Treasury on inversions because he helped finance the deal with Burger King.
Buffett was also a large supporter of Obama’s push to increase the highest individual tax rate to 39.6%.
Many of the richest people in the world still do not pay the highest tax rate, said Buffett, while pointing to the most recent data of the top 400 earners that make an average income of over $200 million a year.
“A number of them were paying at a rate of below 10%, including payroll taxes,” said Buffett. “Now that’s still a lot less than my cleaning lady. It hasn’t been fully corrected.”
Buffett also said that it was most likely a lot easier to fix the corporate tax code by itself then rewrite the individual tax code along with it.
Max Baucus, Democrat from Montana, made earlier efforts with the Senate Finance Committee and House Ways and Means Committee and chairman Dave Camp, Republican from Michigan, who focused on rewriting the whole tax code for businesses and individuals.
Unfortunately, both have gone relatively nowhere.