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Warren Buffett Watch
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After falling for nine straight days, shares of Warren Buffett's Berkshire Hathaway have dropped almost 50 percent from their all-time closing high set last December.
Berkshire closed today at $77,500 a share, down $6,500, or 7.7 percent. It's a fresh three-year low.
That's down 48.1 percent from the all-time closing high of $149,200 set on December 10, 2007.
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Berkshire fell as low as $74,100 in today's session. At that point, it was 51.1 percent below its all-time intraday high of $151,650.
The stock has ended lower for nine straight days, following Berkshire's third quarter earnings report on November 7, which revealed lower operating profits and big paper losses for stock option contracts. Berkshire has lost almost a third of its value since that date.
Yesterday's 12 percent plunge was the stock's worst day since Black Monday in 1987.
Warren Buffett's reputation as the world's greatest investor means the stock's big fall is getting lots of attention.
The Wall Street Journal's Marketbeat blog asks Would Buffett Find Berkshire a Value?
Harry Rady of Rady Asset Management in San Diego answers, "The insurance business, which is a significant portion of their earnings, is a very cyclical business. With everything else at an extremely significant discount, I see a lot more downside. There is so much opportunity to buy assets for 50 cents on the dollar, why buy a dollar for a dollar because Warren Buffett runs it?”
Reuters has a news analysis piece headlined Is Warren Buffett Losing His Touch? It quotes Vahan Janjigian, the author of the recent book Even Buffett Isn't Perfect. "Everything you're seeing that affects other companies is eventually going to catch up with Berkshire. I'm not saying Berkshire is not well-run, but that even well-run companies will be hit in a severe recession."
Reuters quotes Buffett-fan Whitney Tilson as saying "we're buying Berkshire like crazy." He argues that "investors are looking at the derivative exposure, seeing Berkshire marking losses, and it reminds them of AIG and other companies whose derivative exposures got them into trouble. They are coming to the insane conclusion that Berkshire faces similar risks."
Tilson expands on his Buffett defense in a detailed Seeking Alpha post headlined Berkshire Hathaway Credit Risk, Index Puts Are Overblown Worries. He writes, "It’s impossible to rule out unexpected surprises for any company, but anyone who’s studied Buffett will surely take comfort in his 50+ years of conservatism and openness with his investors."
His conclusion: "Berkshire’s freefall in the past few weeks is certifiably crazy – and a buying opportunity that will long be remembered."
Current Berkshire stock prices:
Class A: [US;BRK.A
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Class B: [US;BRK.B
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Data is a real-time snapshot *Data is delayed at least 15 minutes