Warren Buffett Purchases Omaha World-Herald Newspaper

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Nov 302011
 

Warren Buffett announced on November 30 that Berkshire Hathaway has purchased the publisher of the Omaha World-Herald newspaper, as well as several other newspapers in nearby Nebraska and Iowa.  The purchase price was $150 million plus the assumption of $50 million in debt.  

This purchase is consistent with Mr. Buffett’s predilection for both newspaper companies as well as local Omaha companies.  Berkshire owns the Buffalo News, is the largest outside shareholder of the Washington Post Company, and has an investment in Gannett, the publisher of USA TODAY.  In addition, two of Buffett’s previous acquisitions include Nebraska Furniture Mart and Borsheim’s Jewelry, both located in Omaha.

 Posted by at 9:12 pm

Warren Buffett Invests $10.7 Billion in IBM

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Nov 162011
 

Warren Buffett announced on Monday, November 14 that Berkshire Hathaway had invested $10.7 billion in the common stock of IBM.  This equals a 5.5% ownership stake in IBM.  Berkshire had been accumulating this position since March, 2011, and it represents the largest single investment it has made in its equity portfolio, which had a total value of  $59 billion on September 30.  (Previously,  Berkshire  had acquired 100% of the shares of Burlington Northern Sante Fe Railroad for $33 billion.)  Berkshire Hathaway paid an average price of $170 per share for its position.  IBM’s shares closed on November 16 at $186.62, which represents a 10% profit for Berkshire on these shares.  IBM currently ranks second in value ($12 billion) in Berkshire’s portfolio, behind only Coca-Cola ($13 billion).  Berkshire accumulated its Coca-Cola shares in 1988 at a cost of $1.3 billion. 

I was quoted in a Bloomberg article on November 14 on this subject:

Buffett “had the funds and the opportunity to purchase shares at an attractive price,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business. “He’s not going to panic when there are some temporary economic problems which could cause the stock markets to plunge for some period of time. He just sees that as a buying opportunity.”

The entire article is available at:

http://www.bloomberg.com/news/2011-11-14/berkshire-takes-10-7b-ibm-stake-buffett-says.html

I was also interviewed on the PBS Nightly Business Report on November 14:

DAVID KASS, TEACHING FELLOW, UNIVERSITY OF MARYLAND: It may have raised several eyebrows because it is in the technology area, but when one looks at its very stable and growing cash flows, I think it is not a surprise at all.

The entire transcript for this segment is available at:

http://www.pbs.org/nbr/site/onair/transcripts/warren_buffett_buys_into_ibm_111114/

 Posted by at 6:57 pm

Berkshire Hathaway Invests $23.9 Billion in the Third Quarter

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Nov 112011
 

During the third quarter, Berkshire Hathaway invested $23.9 billion.  This compares to $3.62 billion in the second quarter, and $834 million in the first.  The investments, which were disclosed on November 4, include $9 billion for the acquisition of Lubrizol, $5 billion for Bank of America preferred shares and warrants, and $6.9 billion of equities which may be identified when Berkshire releases its SEC 13F filing on November 14.

These investments may not be identified if Berkshire receives confidential treatment from the SEC so as to limit copycat investing while Berkshire is adding to, or reducing, a position.  In addition, Berkshire is not required to report its holdings of foreign based companies.

I was quoted in a Bloomberg article on this topic on November 7:

“He’s broadly diversifying across numerous industries, and he would perhaps want that to be part of his legacy,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business. The third-quarter stock spending “sounds like at least one major investment. And it wouldn’t surprise me if it were two or three,” said Kass.

The entire article is available at:

http://www.bloomberg.com/news/2011-11-07/buffett-broadens-portfolio-by-spending-23-9-billion-in-quarter.html?cmpid=yhoo

I was also interviewed on this subject on the National Public Radio (NPR) program, Marketplace on November 7:

Not so for Buffett, who doesn’t always like to show his full hand. He has a good track record of getting privacy, says University of Maryland professor David Kass.

David Kass: This is not unusual. It’s at least 50 percent of the time. And this has been going on for years.

Buffett often buys and sells big blocks of stock that could move the markets, says Kass.

Kass: He may be getting special treatment largely because there are probably thousands of investors who would follow along and just make similar purchases or sales.

The entire NPR story is available at:

http://marketplace.publicradio.org/display/web/2011/11/07/pm-warren-buffett-bets-big-on-stocks/

 

 Posted by at 5:04 pm

Berkshire Hathaway Reports Sharply Higher Operating Earnings

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Nov 062011
 

Berkshire Hathaway reported 2011 third quarter operating earnings that rose 37% from the corresponding quarter in 2010.  Its net income declined 24% due to noncash derivative losses from the equity index put options that it had previously sold.  These options reflect the decline in the world’s stock markets during the third quarter.  These option contracts did not require any cash payments by Berkshire during the third quarter.  The put options cannot be exercised  until  they expire in 2018 – 2026.  Warren Buffett has called the large quarterly swings in the derivatives portfolio “meaningless” and said operating earnings are the better gauge of Berkshire’s performance.

The quarterly report revealed that Berkshire invested approximately $7 billion in other companies’ shares.   The identity of these investments should be revealed in Berkshire’s 13F filing scheduled to be released after the market closes on November 15. 

The report also indicated that Berkshire repurchased $18 million of its own stock between September 26 and the end of the quarter, September 30.  Berkshire announced its stock buyback program on September 26.

 Posted by at 12:05 am

Hedge Fund Manager Whitney Tilson Meets With University of Maryland Students

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Nov 052011
 

On Friday, November 4, hedge fund manager Whitney Tilson (T2 Partners) met with 30 University of Maryland undergraduate finance majors for 1 1/2 hours in New York City.  Mr. Tilson’s funds have substantially outperformed the S&P 500 since their inception in 1999.  He has also been frequently interviewed on CNBC and the CBS program, 60 Minutes. The topics he covered in his discussion included an overview of the U.S. economy, stock market prices over time, the housing market, and his recent investments in the Hong Kong Dollar and Netflix.  In addition, he recommended several investment related books, some of which he donated to the students.  With respect to his largest investment, Berkshire Hathaway (BRK), Mr. Tilson mentioned that BRK was “the safest stock”.   This was an extremely valuable and educational experience for the students.

 Posted by at 11:22 pm