Warren Buffett Watch
- Hedge Funds Take Early Lead in Warren Buffett's 'Big Bet'
- Amended Berkshire Hathaway Filing Indicates No Secret Stock Stakes at End of Q3
- Buffett's Wealth and Fame Hasn't Helped 'Warren' As a Name
- CNBC VIDEO: Warren Buffett & Bill Gates 'Walk & Talk' at Columbia University
- Warren Buffett to CNBC: Curbing Fed's Independence Could Lead to 'Mischief'
- Warren Buffett to Co-Chair Goldman Sachs Program to Help Small Businesses
- Warren Buffett: 'Reasonable Return is Good Enough' for Long-Haul Railroad Ride
- Warren Buffett's Berkshire Hathaway Almost Doubles Wal-Mart Holdings During Summer
- Warren Buffett's Berkshire Portfolio Snapshot Coming Later Today
- Warren Buffett to CNBC: 'I Haven't Bought American Express In Years'
RSS FEED
MOST SHARED
- Dubai Stocks Shed 7%, Abu Dhabi Tumbles 8%
- Tiger Woods Wants to Protect Family Privacy: Agent
- Governments Must Take Steps To Avoid More Dubais: El-Erian
- Dubai's Nakheel Seeks Suspension $5.25 Billion in Bonds
- South Korea Sees Exports Bouncing, but Risks Remain
- US Shoppers Spent Less Over Black Friday: NRF
- US Senator Opposes Fed Chief Bernanke Renomination
- Sands China Ends 10.2% Lower in Hong Kong Debut
- Tamminen: Copenhagen And Beyond
- My Commodities Outlook after Dubai: Dennis Gartman
- Saab Lovers Sound Off
- Tiger Ads Continue To Run Today
- Cheap Gas, Cheap Gifts
- Diving Partridge Demand Can't Keep Lid on '12 Days' Cost
- Tamminen: Copenhagen And Beyond
- Dubai is Harsh Reminder of Prolonged Global Recovery
- Tiger Woods Wants to Protect Family Privacy: Agent
- Portfolio Prep for Next Week: 'Don't Get Crazy'
- Governments Must Take Steps To Avoid More Dubais: El-Erian
- Regulators Compile Global List of 'Systemic Risk' Banks
- Dubai Stocks Shed 7%, Abu Dhabi Tumbles 8%
- The World's Biggest Debtor Nations
- UAE, Abu Dhabi Ratings Unlikely to Be Cut: Moody's
- US Midwest Business Expands Stronger Than Expected
- BofA Aims to Clearly Spell Out Credit Card Terms
- Advertisers Sticking With Tiger After Accident
- What Black Friday Shoppers Spent on – And Where
Text Size 
Executive Producer
Berkshire Hathaway has lost its AAA credit rating from Fitch, but it doesn't look like the change is primarily due to any recent 'mistakes' by Warren Buffett and his holding company.
 |
It certainly makes it sound like Berkshire, or any other financial company, is going to have a hard time holding onto a triple-A rating in the current storm, no matter what it does or doesn't do.
"Fitch believes that 'AAA' ratings are not appropriate at the holding company level for financial-oriented enterprises given significant market volatility and correlation of risks under stress, recently observed throughout the global economy."
Fitch does specifically cite "potential earnings and capital volatility" from Berkshire's "large, unhedged market exposures" as being "inconsistent with the stability required at the 'AAA' level."
Those "exposures" include "large, concentrated equity investments" (Buffett is not a big believer in diversification) and the "various derivative contracts" that have caused so much concern among some investors, in part because they've generated large "mark-to-market" losses in Berkshire's earnings numbers.
 |
Buffett believes they'll eventually be profitable, and notes that Berkshire has been using the billions of dollars paid by the buyers of those contracts to make money-generating investments now.
Fitch also says its new, lower, ratings reflect a "long-standing" concern: the 'key man' risk posed by Warren Buffett himself. It has nothing to do with his age, says Fitch. Instead it attributes Berkshire's long-term success almost entirely to Buffett's abilities and says that the "concentration" is inconsistent with a triple-A rating.
While perhaps inevitable, the Fitch downgrade does appear to increase the liklihood the larger rating agencies, Standard & Poor's and Moody's, will also strip Berkshire of its top credit ratings.
Indeed, after General Electric's [GE
Loading...
()
] downgrade by S&P yesterday, only four companies besides Berkshire still have triple-A ratings from both S&P and Moody's: American Data Processing [ADP
Loading...
()
], ExxonMobil [XOM
Loading...
()
], Johnson & Johnson [JNJ
Loading...
()
], and Toyota [TM
Loading...
()
].
Current Berkshire stock prices:
Class A: [US;BRK.A
Loading...
()
]
Class B: [US;BRK.B
Loading...
()
]
For more Buffett Watch updates follow alexcrippen on Twitter.
Questions? Comments? Email me at
- Warren Buffett: "Odds Favor" U.S. Acquisition By Berkshire - Bloomberg Interview (March 12)
- Warren Buffett Loses "World's Richest Billionaire" Title (March 11)
- Obama Spokesman: Warren Buffett Was Criticizing Washington, Not the White House (March 9)
- Berkshire's Bank Stocks Boosted By Warren Buffett's Bullish Outlook (March 9)
Data is a real-time snapshot *Data is delayed at least 15 minutes