Why Buffett's company got a ratings cut
Berkshire Hathaway sees its second downgrade in 3 years as S&P questions its enthusiasm for stock investments and its reliance on its insurance arm for dividend income.
Standard & Poor's said it has cut Berkshire's rating to "AA" from "AA+." That's the same rating the company has received from Moody's, but Fitch has taken a dimmer view and rated it one notch lower.
Buffett has long been a champion of buying stocks, but that attitude may have hurt Berkshire's credit rating. In handing down its cut, S&P cited the riskiness of Berkshire's stock holdings, according to Bloomberg. The agency also doesn't like the way the company retains less capital than its competitors to support its insurance operations.
S&P is also concerned about who will replace Buffett when he steps down as CEO. Although Buffett, 82, undoubtedly has a succession plan in place, he has not made that information public. Finally, S&P said Berkshire is too dependent on its insurance business for most of its dividend income.
Berkshire shareholders took the news in stride Thursday. The company's class-A shares fell by less than 1% to $167,906. The stock has been on a hot run, climbing 40% in the past year.
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Seems to always be a lot of I-wish-I-had-bought-some sour grapes showing up after any Buffett article.
All you have to do is check the 20 or 10-year charts to see how well he has done for his investors.
Of course there's no guarantee that he will continue producing at such high return levels, but I'm sure I won't be cashing in my BRK any time soon.
I never had money to be an investor. But growing up I read and learned that Buffet was a GOD and had sheepfollowers (people) just listening to him. Whatever he said was gold and I could not believe how his words and actions were controlling the market in some way. He played the lottery and got lucky with his fortune. Hey, good for him.
I still don't follow people who act like GOD and have worshippers.
Whenever most people speak of Buffet, they seldom mention Munger; Charlie Munger..
Buffet and Munger have been partners in their business venture, for decades.
And very few people rise to stature or power, without the help of the many..
Munger and Buffet....Have brought on board a couple of educated and promising prospects to take over Berkshire and run the businesses...Although successors are not outright named yet..
One or both of these last two guys appear to have a good shot..
I believe their last possible selection.....Didn't pan out..??
But still believe old Warren will be watching like a mother hen, when maybe letting go of some of the reins...Munger I think has already stepped back some and has encouraged Buffet to follow.
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[BRIEFING.COM] S&P futures vs fair value: -0.40. Nasdaq futures vs fair value: -11.00. The stock market is on track to begin the final trading day of the holiday-shortened week on a subdued note. The S&P 500 futures trade right in line with fair value, while Nasdaq futures lag (-11 versus fair value) as Google (GOOG 553.64, -10.26) weighs after reporting below-consensus quarterly results.
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