Highlights of Warren Buffett’s CNBC Interview – October 24

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Oct 242012
 

Warren Buffett was interviewed for two hours on CNBC on October 24.  These are some of the highlights of that interview:

(1) The stock market generally is the best place to have money.  Stocks that are likely to do well over 5 – 10 years should be bought steadily over time and held regardless of the news.

(2) The worldwide economy is slowing, but the U.S. economy is inching ahead.  U.S. residential housing is picking up.

(3) He likes to buy stocks at lower prices after a market decline.

(4) In the past week he has added to Berkshire Hathaway’s holdings in Wells Fargo (WFC).  It is very well run.  He has added $1 billion of WFC’s shares this year.

(5) Ben Bernanke is doing a superb job.  He would rather have Bernanke as Chairman of the Federal Reserve Bank than anyone else.

(6) He buys stocks for future earnings.  He likes firms that repurchase shares.  IBM repurchased $3 billion of shares in each of the first three quarters of 2012.  Although IBM is struggling a little, he has great confidence in them over the years.  He has added many hundreds of millions of dollars of IBM this year ($12 billion holding).  He is delighted to be in IBM.  It will probably do better abroad than in the U.S. over time.

(7) Berkshire has over $40 billion in cash and he is “salivating” over making a large ($20 billion) acquisition.  There have been two possible $20 billion deals this year that CEO’s were willing to make.  But the prices were too high.  Prices have been bid up as a result of the very low interest rates which facilitate the borrowing and bidding for companies by others.  Instead, he has made 15 bolt-on acquisitions for a total of $2 billion this year.  These acquisitions fit with companies Berkshire owns.

(8) U.S. businesses will get a lot better over the next four years regardless of who is elected President.

This article has been published by ForexPros:

http://www.forexpros.com/analysis/highlights-of-warren-buffett%E2%80%99s-cnbc-interview-%E2%80%93-october-24-141083

 

 Posted by at 11:17 pm

25th Anniversary of the 1987 Stock Market Crash

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Oct 182012
 

October 19, 2012 is the 25th Anniversary of the stock market crash of 1987.  On “Black Monday”, October 19, 1987, the Dow Jones Industrial Average (DJIA) plunged by 22.6% (508 points) for the largest single one day percentage decline in over 100 years.  Even the stock market crash of 1929, which encompassed two days (October 28 and October 29, 1929) did not have a daily decline greater than 13%.  (The stock market at that time did decline by 25%, but it was over a two day period.)  A 22.6% decline of the DJIA at its closing price of 13,487 on October 18, 2012 would imply a drop of 3,048 points.

Over the past 25 years, from its closing price on October 19, 1987, the DJIA has increased at a compounded annual return of 8.7% (plus dividends of about 3% per year).

Although some very well known investors of that era sold large portions of their holdings into the crash, Warren Buffett was not one of them.  Not only did Buffett not sell any of Berkshire Hathaway’s major stock holdings at that time, he very calmly waited for the stock market to stabilize.  Beginning in March, 1988, Warren Buffett began to accumulate what is today Berkhsire’s largest equity holding, Coca-Cola ($15 billion).   Warren Buffett purchased his position for less than 10% of today’s price, and he has held on to these shares ever since.

 

 Posted by at 8:28 pm

Ted Weschler Adds to Berkshire Hathaway’s 11% Stake in DaVita

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Oct 122012
 

In an SEC Form 4 filing after the market closed today, Berkshire Hathaway revealed that it added 286,000 shares of kidney dialysis company DaVita (DVA) between October 9 and October 12 at prices as high as $111.21.  DVA’s closing price on October 12 was $110.42.  Berkshire’s stake is currently valued at $1.2 billion and represents 11% of DVA.

Ted Weschler, who joined Berkshire in early 2012 as a portfolio manager, apparently purchased these shares.  Mr. Weschler’s hedge fund, Peninsula Capital, held a substantial position in DVA from 2003 – 2011.  DVA was consistently one of Peninsula Capital’s  three largest investments over this time period.

 

 Posted by at 9:27 pm

Berkshire Hathaway Added to DaVita (DVA) Holding on October 9

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Oct 122012
 

Berkshire Hathaway added to its almost 11% position in DaVita (DVA) on October 9.   According to an SEC filing, Berkshire purchased 68,000 shares at prices as high as $108.21 per share.  This investment was most likely made my Ted Weschler.  Berkshire’s position in DVA is currently valued at over $1.1 billion.  DVA was a large holding in Mr. Weschler’s hedge fund, Peninsula Capital, from 2003 – 2011.   Ted Weschler joined Berkshire Hathaway in early 2012.

This article was published by Forexpros:

http://www.forexpros.com/analysis/berkshire-purchase-appears-to-follow-weschler’s-lead-139637

 Posted by at 10:31 am

Berkshire Hathaway Raises Stake in DaVita to Over 10 Percent of Kidney Dialysis Firm

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Oct 012012
 

In a Securities and Exchange Commission filing today, Berkshire Hathaway revealed that it increased its holding in DaVita (DVA) by 900,000 shares to 10.2 million shares during the quarter ending September 30.  This represented an additional investment of  $93 million at today’s closing price of $103.44.  Berkshire’s entire stake is currently valued at $1.1 billion and represents about 10.8% of DaVita’s common shares.  Berkshire took its initial stake during the fourth quarter of 2011 and has been adding substantially to its position in each of the first three quarters of 2012.  Today’s filing indicated that Berkshire added 282,000 shares from September 26 – 28 at prices as high as $103.72 per share.

This investment was likely made by Ted Weschler who joined Berkshire in early 2012.  Prior to joining Berkshire, Mr. Weschler’s firm, Peninsula Capital Adviors, LLC  held positions as large as 6 million shares of DaVita dating back to at least September 30, 2003.  (SEC data are not available prior to that date.)  DaVita was consistently one of Ted Weschler’s top three investments at Peninsula Capital over this time period.

 Posted by at 7:58 pm