Warren Buffett Watch
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S&P has lowered its outlook on Berkshire to "negative" from "stable" and indicated it may downgrade the company's rating by one notch over the next twelve months.
In a news release on the S&P site, credit analyst John Iten is quoted as saying, "The decline in equity values in 2009 has reduced the statutory capital of the insurance operations, and a preliminary analysis of the group's capital adequacy indicates that the group's capital is no longer redundant at the 'AAA' level."
But S&P says that over the next year, "If the value of the group's substantial equity investment holdings were to stabilize or improve during this period, or if it appears that the group will be able to rebuild its capital position back to a level commensurate with the current ratings within a reasonable period of time (typically one to two years) through earnings or other means, we could revise the outlook back to stable."
Bob O'Brien at Barron's doesn't think Berkshire will be keeping its triple-A much longer. In his opinion, "A cut to the credit rating at Berkshire - once regarded as unthinkable - looks increasingly likely."
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American University finance professor Gerald Martin tells Bloomberg, "Pretty much any company in the world has to have a negative outlook at this point. It’s a reflection of the economy more than it is something that’s happening at Berkshire Hathaway."
That was pretty much what Fitch said earlier this month, focusing on financial companies, when it took away's Berkshire's triple-A, although it also cited some specific negative factors.
Will Moody's also go negative on Berkshire? Buffett's company is Moody's largest shareholder, prompting The Business Insider's Clusterstock to suggest that Moody's looks like a "black sheep" and could raise more questions about a "conflict of interest" if they don't say something soon.
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