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Investing Warren Buffett Watch

  Monday, 6 Sep 2010 | 9:31 PM ET

Warren Buffett & Bill Gates Seek to Soothe Suspicions Over China Philanthropy Visit

Posted ByAlex Crippen
Bill Gates, Warren B_33889550
David Goldman

Warren Buffett and Bill Gates will reportedly travel to China later this month to "learn how to do philanthropy" in that nation.

China's Economic Observer newspaper says Gates and Buffett have invited a "select group" of 50 to 60 members of the nation's "business elite" to a "private party" in Beijing.

Some of those invited, however, have declined to attend, apparently over concerns they'd be asked, or even pressured, to make a donation pledge at the event.

In June, Buffett and Gates used Fortune Magazine to publicly challenge America's richest billionaires to pledge they will donate 50 percent of their wealth to charity, and just over three-dozen have already accepted that challenge.

Bloomberg quotes a Gates Foundation spokesman in Beijing as saying Buffett and Gates may soon release a letter to ease some of the concerns the Chinese guests will also be put on the spot to make a big pledge. "Our biggest intention for this month’s China trip is to learn how to do philanthropy in China. We would like to learn how to propel the charity business in such a big developing nation."

»Read more
  Thursday, 26 Aug 2010 | 1:41 PM ET

Charlie Munger's Wesco Soars on Buyout Offer by Warren Buffett's Berkshire Hathaway

Posted ByAlex Crippen
100430_MungerScreenGrab.jpg

Shares of Charlie Munger's Wesco Financial spiked as much as 19 percent higher today (Thursday) to $387/share after Warren Buffett's Berkshire Hathaway revealed plans to buy the almost 20 percent of Wesco it doesn't already own.

Munger, Buffett's long-time friend and business partner, is Wesco's Chairman of the Board.

Wesco's independent directors and non-Berkshire shareholders still need to approve the transaction.

Wesco shares have settled back a bit from today's high, but is still up almost 13 percent at $366 as of 1:30p ET today.

Current price:

Berkshire is proposing to pay Wesco's book value per share at the time the deal closes. Dow Jones notes that at the end of the second quarter, book value was around $353 per share, but has probably changed since then. Even so, it appears Wesco's market price was well below its book value at the time of the offer, resulting in today's surge.

The stock is still well below its 52-week high of $416 on March, 10, 2010.

»Read more
  Sunday, 22 Aug 2010 | 3:30 PM ET

Warren Buffett's Semi-Secret Stock Picker Lou Simpson Set to Retire

Posted ByAlex Crippen
Lou Simpson
Lou Simpson

The low-profile 73-year-old man whose stellar stock picks are often attributed to Warren Buffett is calling it quits.

In her Chicago Tribune column, Melissa Harris breaks the big news that media-shy Lou Simpson will retire at the end of the year.

For decades, he's been quietly, independently, and profitably managing the now $4 billion investment portfolio at Geico, the Berkshire Hathaway insurance subsidiary.

Buffett will take over those responsibilities, but there's some speculation Simpson's departure could create an opportunity for Li Lu, the Chinese investor who Charlie Munger says is a "foregone conclusion" to become one of Berkshire's top decision makers on investments.

Buffett says Simpson never sought approval for his buying and selling decisions. Last year, five million Bank of America shares in Berkshire's portfolio slipped Buffett's mind as he described its bank holdings because it was Simpson who had bought them.

The two men, however, do have very similar investment styles and successes.

In his 2004 letter to shareholders, Buffett said Simpson is "a cinch to be inducted into the investment Hall of Fame," even though sometimes he will "silently disagree" with his decisions. But, Buffett acknowledges in tiny print, "Usually he's right."

In that letter, a table headlined "Portrait of a Disciplined Investor" details how Geico's portfolio suffered annual losses only three times from 1980 to 2004 and beat the benchmark S&P 500 stock index 18 times. Simpson's average annual gain over that period: 20.3 percent vs the S&P's 13.5 percent.

»Read more
  Tuesday, 17 Aug 2010 | 5:00 PM ET

Stocks End Higher; Dow Snaps Losing Streak

Posted ByAbby Schultz

Stocks ended higher Tuesday with the Dow gaining more than 100 points to snap a five-day losing streak. The rally followed a series of government data releases and earnings reports that showed hints of strength returning to the economy.

The Dow Jones Industrial Average ended up 103.8 points, or 1 percent, to 10,405.85 amid light volume, and after losing about 40 points in the last half hour of trading.

Most Dow components were in positive territory with Home Depot, Alcoa and DuPont in the lead. Kraft and JP Morgan fell.

The S&P 500 ended up 13.2 points, or 1.22 percent, to 1,092.54 and the Nasdaq ended up 27.6 points, or 1.3 percent, to 2,209.44. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell more than 7 percent, below 24.

The key S&P sectors were all higher Tuesday, led by materials, industrials and consumerdiscretionary.

The rally may be attributed to a report of stronger-than-expected industrial production, which provided evidence the manufacturing sector is strong, and a better-than-anticipated capacity utilization rate, said Paul Zemsky, head of asset allocation at ING Investment Management.

Capacity utilization rose to 74.8 percent, 5.7 percentage points above a year earlier, indicating that industry is increasing its output. That news helped quell deflation fears, said Zemsky. Housing starts and producer price data released Tuesday was also largely positive, giving investors reason to cheer a bit, he added.

"There's plenty of room for the market to rally on good news," Zemsky said.

Despite the strong showing Tuesday, the market is still trading within a range that Brian Gendreau, market strategist at Financial Network, doesn't expect will be broken until after the mid-term elections and the uncertainty over the direction in Washington is resolved.

Once the mid-terms are over, Gendreau expects stocks to rise and end the year higher. One reason: in the 17 mid-term elections held since 1942, the market has gone up decisively 16 times, Gendreau said.

In earnings news, Home Depot shares jumped more than 3 percent after the home improvement retailer reported a slightly higher-than-forecast profit. However, the retailer's quarterly revenue was lower than expected.

Wal-Mart also rose after the retail giant posted a higher-than-expected quarterly profitand raised its full-year forecast, thanks to cost cuts and international growth. The company, however, said the slow economic recovery will continue to affect consumers.

As a sign of weaker consumer interest, Wal-Mart reported its fifth consecutive drop in same store sales, and the outlook isn't much better, Patrick McKeever, a senior equity analyst at MKM Partners, said on CNBC.

"We could see another negative quarter," McKeever said.

»Read more
  Tuesday, 17 Aug 2010 | 3:49 PM ET

Stocks Advance Ahead of Close; RIM Slips

Posted ByAbby Schultz

Stocks advanced decisively Tuesday, with the Dow on track to snap a five-day losing streak. The rally followed a series of government data releases and earnings reports that showed hints of strength returning to the economy.

The Dow Jones Industrial Average was up more than 120 points amid light volume, after a slight dip Monday that nonetheless marked five straight days of losses for the blue-chip index.

Most Dow components were in positive territory with Home Depot, Alcoa and DuPont in the lead. Kraft was down slighltly.

The S&P 500and Nasdaq were also higher, now for the third straight day. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell more than 8 percent, below 24.

The key S&P sectors were all higher Tuesday, led by materials, industrials and consumerdiscretionary.

Investors were reacting to a report of stronger-than-expected industrial production, which provided evidence the manufacturing sector remains strong, and a better-than-anticipated capacity utilization rate, said Paul Zemsky, head of asset allocation at ING Investment Management.

Capacity utilization rose to 74.8 percent, 5.7 percentage points above a year earlier, indicating that industry is increasing its output. That news helped quell deflation fears, said Zemsky. Housing starts and producer price data released Tuesday was also largely positive, giving investors reason to cheer a bit, he added.

"There's plenty of room for the market to rally on good news," Zemsky said.

Despite the strong showing Tuesday, the market is still trading within a range that Brian Gendreau, market strategist at Financial Network, doesn't expect will be broken until after the mid-term elections and the uncertainty over the direction in Washington is resolved.

Once the mid-terms are over, Gendreau expects stocks to rise and end the year higher. One reason: in the 17 mid-term elections held since 1942, the market has gone up decisively 16 times, Gendreau said.

In earnings news, Home Depot shares jumped more than 4 percent after the home improvement retailer reported a slightly higher-than-forecast profit. However, the retailer's quarterly revenue was lower than expected.

Wal-Mart also rose after the retail giant posted a higher-than-expected quarterly profitand raised its full-year forecast, thanks to cost cuts and international growth. The company, however, said the slow economic recovery will continue to affect consumers.

As a sign of weaker buying interest, Wal-Mart reported its fifth consecutive drop in same store sales, and the outlook isn't much better, Patrick McKeever, a senior equity analyst at MKM Partners, said on CNBC.

"We could see another negative quarter," McKeever said.

»Read more
  Tuesday, 17 Aug 2010 | 11:58 AM ET

Stocks Gain More than 1%; Home Depot Rises

Posted By CNBC.com

Stocks rose significantly Tuesday after days of losses, following a series of government data releases and earnings reports that showed hints of strength returning to the economy.

The Dow Jones Industrial Average was up more than 100 points, after a slight dip Monday on very thin volume that nonetheless marked five straight days of losses for the blue-chip index.

Alcoa, Home Depot and DuPont led advancers. Kraft was the only Dow component to fall.

The S&P 500and Nasdaq were also higher. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 25.

The key S&P sectors were all higher Tuesday, led by materials, industrials and consumer discretionary.

Despite the strong positive moves, the market is still trading within a range that Brian Gendreau, market strategist at Financial Network, doesn't expect will be broken until after the mid-term elections and the uncertainty over the direction in Washington is resolved.

Once the mid-terms are over, Gendreau expects stocks will rise and will end the year higher. One reason: in the 17 mid-term elections held since 1942, the market has gone up decisively by 90 days after the election 16 times, Gendreau said.

The Federal Reserve reported Industrial Production rose 1.0 percentin July on strong factory output from auto manufacturing. The results were better than the 0.7 percent expected. June's results were revised to a loss of 0.1 percent. Factory output grew by 1.1 percent in July.

Capacity utilization was reported at 74.8, better than the expected increase of 74.6 percent.

The Commerce Department said housing starts rose 1.7 percentto a seasonally adjusted annual rate of 546,000 units in July, weaker than expected. Forecasts called for an annual rate of 550,000 units. June's housing starts were revised to show an 8.7 percent fall, which was previously reported as a 5 percent drop.

Also, the Labor Department reportedU.S. producer prices rose by 0.2 percentin July, the first rise in four months, pulled by higher prices for food and consumer goods. The figure was in line with expectations, and follows a dip of 0.5 percent in June.

Big retailers delivered earnings today, including Home Depot, which reported a slightly higher-than-forecast profit of 72 cents a share, better than the anticipated 71 cents a share. The retailer's second-quarter revenue was lower than expected, however.

Also Wal-Mart was slightly higher after it posted a higher-than-expected quarterly profitand raised its full-year forecast on Tuesday, thanks to cost cuts and international growth. The big-box retailer, however, said the slow economic recovery will continue to affect consumers.

As a sign of weaker buying interest, WalMart reported its fifth consecutive drop in same store sales, and the outlook isn't much better, Patrick McKeever, a senior equity analyst at MKM Partners, said on CNBC Tuesday.

"We could see another negative quarter," McKeever said.

Shares of TJX , were higher after the owner of deep-discount clothing and houseware chains T.J. Maxx, Marshalls and HomeGoods reported a jump in earnings of nearly 17 percent, as sales climbed. The retailer also raised its full-year outlook.

In merger news, the board of Potash of Saskatchewan, Canada, which focuses on fertilizer and industrial and feeds products, has rejected an unsolicited takeover bid from BHP Billiton , a diversified natural resources company, saying the deal undervalued the company. Potash's shares jumped more than 25 points, while BHP slipped.

General Motors is expected to file to go public Tuesday. The offering is expected to raise between $15 billion and $20 billion, making it one of the largest IPOs.

GM also announced Tuesday that it is recalling more than 243,000 model year 2009/2010 crossover sport utility vehicles to inspect safety belts for possible damage.

Tech stocks are largely higher Tuesday with the exception of Research in Motion . Wedbush downgraded the maker of the Blackberry to "outperform" from "neutral" and cut the stock's price target to $57 from $65.

Also, RIM reportedly has assured the Indian government it can have limited access to Blackberry Messenger email and instant messaging services by Sept. 1.

In other housing news, the Treasury Department is hosting a forum on what the government should do to reform Fannie Mae and Freddie Mac. Treasury Secretary Timothy Geithner made clear the government-sponsored enterprsies won't be able to return to business as usual. The housing finance companies have received nearly $150 billion in taxpayer bailout money since they were placed into conservatorship by the government in 2008.

Barclays Bank Plc

has agreed to pay nearly $300 million to settle criminal

charges that it violated U.S. sanctions in dealings with Cuba,

Iran, Libya, Sudan and Myanmar, according to U.S. court

documents filed Monday.

The London-based bank was charged with violating the

International Emergency Economic Powers Act and the Trading

with the Enemy Act in its dealings that involved $500 million

from 1995 until September 2006, according to the documents.

The Barclays case marked the latest in a series brought by

U.S. prosecutors in recent months against major banks. According to a quarterly filing with the U.S. Securities and Exchange Commission, George Soros trimmed his holdings in Pfizer, JPMorgan Chase, AT&T, and Wal-Mart, while Warren Buffett's Berkshire Hathaway cut stakes in ConocoPhillips (COP), Kraft Foods (KFT) and Procter & Gamble. Berkshire also bought shares of Fiserv and boost its stake in Johnson and Johnson.

In other news, Spain's Santander renewed talks to merge its U.S. operations with those of M&T Bank, the Financial Times reported. And Hefty bag maker Pactiv is reportedly in talks to be acquired by New Zealand's Rank Group.

Later This Week:

WEDNESDAY: MBA mortgage applications, weekly oil inventories; earnings before the bell from Deere and Target
THURSDAY: Jobless claims, leading indicators, Philadelphia Fed survey; earnings after the bell from HP, Dell, Gap and Intuit
FRIDAY: No major events scheduled

More From CNBC.com:

»Read more
  Tuesday, 17 Aug 2010 | 9:22 AM ET

Futures Rise After Production Data

Posted By CNBC.com

U.S. stock index futures are higher after a series of government data showed some strength in the economy, including a better-than-expected reading on industrial production. WalMart and Home Depot reported better-than-expected results.

The Federal Reserve reported Industrial Production rose 1.0 percent in July on strong factory output from auto manufacturing. The results were better than the 0.7 percent expected. June's results were revised to a loss of 0.1 percent. Factory output grew by 1.1 percent in July.

Capacity utilization was reported at 74.8, better than the expected increase of 74.6 percent.

The Commerce Department said housing starts rose 1.7 percentto a seasonally adjusted annual rate of 546,000 units in July, weaker rate than expected. Forecasts called for an annual rate of 550,000 units. June's housing starts were revised to show an 8.7 percent fall, which was previously reported as a 5 percent drop.

Also, the Labor Department reportedU.S. producer prices rose by 0.2 percentin July, the first rise in four months, pulled by higher prices for food and consumer goods. The figure was in line with expectations, and follows a dip of 0.5 percent in June.

European shares were higher with miners seeing strong gains. Two important bond auctions took place in Spain and Ireland, with good demand seen for the government debt. Asian stocks ended mixed, but mostly higher.

Dow component Home Depotreported a slightly higher-than-forecast profit of 72 cents a share versus forecasts of 71 cents a share, but its second-quarter revenue missed. Also Wal-Martposted a higher-than-expected quarterly profitand raised its full-year forecast on Tuesday, helped by cost cuts and international growth. The retailer, however,

Teen retailer Abercrombie & Fitch also posted better-than-expected profits of $19.5 million or 22 cents a share. The retailer said sales were lifted by discounts in the quarter.

General Motors is expected to file its IPO paperwork Tuesday, according to multiple sources, and the offering is expected to raise between $15 billion and $20 billion, which would make it one of the largest IPOs ever.

»Read more
  Monday, 16 Aug 2010 | 4:35 PM ET

Warren Buffett's Berkshire Hathaway Boosts J&J Stake by a Billion Dollars

Posted ByAlex Crippen
080514_whats_buffett_buying.jpg

Warren Buffett's Berkshire Hathaway boosted its stake in Johnson & Johnson by 73 percent between March 31 and June 30, adding 17.4 million shares worth just over $1 billion at today's closing price of $58.01.

Berkshire's holdings in J&J have ranged from a high of 61.75 million shares as recently as September 30, 2008 to a low of 23.89 million shares at the end of this year's first quarter.

In his annual letter to shareholders in February, Buffett said that his largest sales of 2009 , including Johnson & Johnson, helped pay for other non-stock purchases, including its acquisition of the Burlington Northern Santa Fe freight railroad.

But he said the sales were not motivated by a belief the stocks would fall in price. "Charlie (Munger) and I believe that all of these stocks will likely trade higher in the future."

»Read more
  Tuesday, 10 Aug 2010 | 2:04 PM ET

Shorter Bond Durations May Mean Buffett Sees Interest Rates Moving Higher

Posted ByAlex Crippen
Warren Buffett
Getty Images
Warren Buffett

An increase in short-duration bonds in the Berkshire Hathaway portfolio is being seen as a sign Warren Buffett expects higher interest rates sooner rather than later.

Bloomberg looked at Berkshire's quarterly report released late last week, and found that "21 percent of holdings including Treasuries, municipal debt, foreign-government securities and corporate bonds were due in one year or less as of June 30."

Bloomberg says that's up from 18 percent as of March 31 and 16 percent at the end of June last year.

It quotes Stifel Nicolaus analyst Meyer Shields as saying, "It may be a sign that Buffett expects interest rates to start rising, maybe sooner than the conventional wisdom."

As early as last year, Buffett was warning that although massive government spending was necessary to prevent an economic collapse, it could also fuel inflation.

»Read more
  Monday, 9 Aug 2010 | 3:29 PM ET

Cramer Reveals 'Single-Best Chart' In Whole Book

Posted ByDrew Sandholm

Warren Buffett's company, Berkshire Hathaway , is a "clear buy," Cramer said on Monday's Stop Trading!.

"This is one of the finest operating quarters I've seen from Berkshire," he noted. "The railroad is on fire."

  • Who Is the Worst CEO in 2010?

Operating profit increased by 73%, but a 40% drop in second-quarter income drew more attention Friday.

"The headline was all wrong," Cramer said, adding that Berkshire has the "single-best chart in the whole book."

Elsewhere in the market, shares of McDonald's hit an all-time high Monday after the fast food giant reported better-than-expected July sales data.

Cramer called the restaurant chain operator a "really well-run company" and praised CEO James A. Skinner. He said McDonald's has found success by adding to its menu and noted it is accelerating earnings. If the euro goes to 1.40, he thinks there will be easier compares in the fourth-quarter.

The Mad Money host also continued his push for a public IPO for General Motors, so that US taxpayers who funded the bailout of the once-bankrupt automaker will have the chance to invest in the company.

»Read more

About Buffett Watch

  • Warren Buffett is arguably America’s most-admired and most-followed investor. Buffett is the largest shareholder and CEO of Berkshire Hathaway and one of the world’s most famous and most generous philanthropists. Legions of investors - from all walks of life - follow Buffett's homespun investment philosophy: invest in what you know, invest in value. Here on CNBC.com's Warren Buffett Watch, we’ll keep you up to date on what the “Oracle of Omaha” is doing by following Buffett's trades, words and deeds.