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Investing Warren Buffett Watch

  Friday, 7 May 2010 | 7:11 PM ET

Warren Buffett Still Selling Procter & Gamble Shares in First Quarter

Posted ByAlex Crippen
Procter & Gamble's HQ in Cincinnati, Ohio
P&G
Procter & Gamble's HQ in Cincinnati, Ohio

Warren Buffett's Berkshire Hathaway continued to sell shares of Procter & Gamble during the first three months of the year. It's likely the sales are part of Buffett's efforts to raise money for his big railroad acquisition.

The company's 10-Q filing with the SEC shows its cost basis for P&G fell to $4.46 billion as of March 31, down $502 million from $4.92 billion as of December 31, 2009.

(The filing also includes details on Berkshire's biggest quarterly profit since 2007. Highlights were released by Buffett at Saturday's annual shareholders meeting .)

In mid-February, Berkshire reported it had sold 8.8 million shares of P&G during last year's fourth quarter, reducing its stake by 9.1 percent to 87.5 million shares.

In his annual letter to shareholders later that month, Buffett says sales of P&G and other stocks, including Johnson & Johnson during 2009 helped pay for Berkshire's now-completed $26 billion purchase of Burlington Northern Santa Fe, along with non-traded securities from Dow Chemical and Swiss Re .

In a live CNBC interview on March 1 , Buffett told us:

"Anybody who owns Proctor & Gamble or Johnson & Johnson is going to hold them for 10 years, in my view is going to make a bit of money. And on the other hand, we had to come up with 8 billion of cash. We had to borrow another 8 billion to do Burlington and I wanted to end with 20 billion in cash."

Today's 10-Q from Berkshire lists $25.67 billion in cash and cash equivalents at the end of the first quarter.

We'll get more details on Berkshire's buying and selling of stocks when the company releases its complete Q1 equity portfolio snapshot later this month.

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  Friday, 7 May 2010 | 11:13 AM ET

Warren Buffett's Defense of Goldman Draws Criticism .. and a Defender

Posted ByAlex Crippen
wbw_defending_goldman_200.jpg

Warren Buffett's high-profile defense of Goldman Sachs has provoked sharp reactions this week.

Monday's Buffett Watch post Warren Buffett to CNBC: 'I Don't See Problem' With Goldman's Abacus Deal prompted an unusually large number of viewer comments. Many of them are negative.

And it's not just CNBC.com users.

Financial Times commentator John Gapper writes , "Investors trust Mr Buffett to distinguish between self-interest and the public interest - something his remarks in Omaha failed to do."

In her Bloomberg column, Buffett biographer Alice Schroeder describes Buffett as seemingly "struck blind" by the money Berkshire is getting from its Goldman investment and "he doesn't seem to understand that this episode will be a permanent mark on its -- and his -- record."

The Street.com's Lauren Tara LaCapra calls Buffett a "hypocrite" on both Goldman and derivatives.

On MarketWatch, David Weidner offers a parody of Buffett's annual letter to shareholders: "You know who else gets a bad rap? Bernie Madoff. Like I said about Goldman, I haven't seen anything in Madoff's behavior that makes him any more subject to criticism than investment managers generally."

And SmartMoney columnist James B. Stewart writes that while Buffett may have an excellent understanding of Goldman's Abacus deal, "I'm not sure he understands the securities laws or the legal definition of fraud." Stewart says Buffett's argument that Goldman didn't need to disclose the identity of the deal's counterparties is a "straw horse." The SEC "didn't file a fraud case because Goldman failed to disclose Mr. Paulson's identity to potential counterparties." Instead, writes Stewart, "The essence of the alleged fraud is that Goldman let the short seller choose some of the underlying subprime mortgages, failed to disclose that, and instead promoted the idea that an independent third party chose those securities."

Stewart concludes, "Plenty of questions in this case remain unanswered, which is why I believe it's risky for Mr. Buffett to get too far out on the Goldman limb before the facts are known."

It's not all negative. Buffett's defense of Goldman was itself defended by Andrew Ross Sorkin in the New York Times:

"Have we all been thinking about this the wrong way? Mr. Buffett’s view — conventional, perhaps, on Wall Street but contrarian on that mythical place called Main Street that Mr. Buffett usually occupies — is worth considering for at least one reason: No one else of prominence has spoken out so publicly in support of Goldman. In his trademark way, he made a plain-spoken case that makes sense."

So, what do you think... vote now.

Current Berkshire stock prices:

Class B:

Class A:

For more Buffett Watch updates follow alexcrippen on Twitter .

Email comments to buffettwatch@cnbc.com

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  Tuesday, 4 May 2010 | 9:48 AM ET

Chadwick: Whom Do You Trust – Warren Buffett or The Federal Government?

Listening to Warren Buffett as he discussed Goldman Sachs on Squawk Box yesterday morning, I was struck by both his eminent business sense as well as his common sense. His assessment of the securities firm and its CEO, Lloyd Blankfein, was reasoned, and was based on his many years of dealing with the company as well as his own immensely sound and proven business acumen.

Mr. Buffett understands risk and how markets work.

He knows that in the world of buying and selling complex financial instruments, responsibility is a two way street.

Caveat emptor.

The buyers of the instruments at issue were not naïve individuals, unfamiliar with the vicissitudes of the market; rather, they were sophisticated investors, looking for a risky investment with a kick. Mr. Buffett admitted to making mistakes of his own, to failing to see the bubble in the residential real estate market. It was reassuring to hear him make that admission.

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  Monday, 3 May 2010 | 12:46 PM ET

CNBC TRANSCRIPT & VIDEO: Warren Buffett on Goldman Sachs and U.S. Economic Rebound

Posted ByAlex Crippen
100503_Buffett_Transcript.jpg

Warren Buffett defended Goldman Sachs as it faces SEC fraud accusations and talked about the signs of "real strength" he's seeing in the U.S. economy during a live interview in Omaha today, May 3, 2010 with Becky Quick on CNBC's Squawk Box .

It was his first live TV appearance after answering shareholders' questions for almost five hours at this weekend's Berkshire Hathaway annual meeting.

Here are video clips and a transcript of their conversation.

BECKY QUICK: Our guest host for the next hour is Warren Buffett. He's the Berkshire Hathaway chairman and CEO. And, Mr. Buffet, thank you for joining us this morning.

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  Monday, 3 May 2010 | 11:09 AM ET

Warren Buffett to CNBC: 'I Don't See Problem' With Goldman's Abacus Deal

Posted ByAlex Crippen
buffett_warren_050310_200.jpg
CNBC

Warren Buffett tells CNBC this morning that he does not see a "problem" with the Goldman Sachs Abacus deal at the center of SEC fraud charges against the firm.

He says there's nothing "unique" about the 2007 Abacus deal and points out that a lot of banks and others, including American homeowners, lost money betting on the housing market at the time.

"When there's a mass delusion, you can say everyone is to blame... There's no villain."

Buffett also endorses CEO Lloyd Blankfein, saying he's done a "great job" at the company and should continue as CEO.

Buffett says he has not had any conversations with Blankfein about him possibly stepping down as Goldman chief. Buffett also says he hasn't spoken with Blankfein about settling with the SEC and doesn't think there's a legal reason to do so.

He leaves it up to Goldman's board of directors to decide if there is a 'business' justification for settling the SEC's charges, a possible he calls "conceivable." If not, the situation "will play out over time."

Buffett says he's "talking his belief," not simply defending Goldman because Berkshire invested $5 billion in the firm in September of 2008. Goldman is paying Berkshire a dividend of 10 percent a year on that $5 billion loan. Berkshire also has the option to buy another $5 billion of Goldman stock at $115 per share. Current price:

Buffett was interviewed live on Squawk Box by Becky Quick after this weekend's Berkshire Hathaway shareholders meeting drew over 40,000 people to Omaha.

At the start of a lengthy Q&A session with shareholders, Berkshire delivered a detailed explanation of the Abacus deal as he defended Goldman. But in an interview with Becky Saturday morning, Buffett acknowledged that Goldman Sachs has "lost the PR battle at this point."

Current Berkshire stock prices:

Class B:

Class A:

For more Buffett Watch updates follow alexcrippen on Twitter .

Email comments to buffettwatch@cnbc.com

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  Monday, 3 May 2010 | 8:41 AM ET

Warren Buffett to CNBC: Economy Showing Signs of 'Real Strength'

Posted ByAlex Crippen
Warren Buffett and Becky Quick on CNBC's Squawk Box
CNBC
Warren Buffett and Becky Quick on CNBC's Squawk Box

Warren Buffett tells CNBC the U.S. economy has started to show signs of "real strength" in March and April, and it's not just companies replenishing their inventories.

Buffett says there's been an increase in manufacturing activity and some improvement in consumer demand as people regain confidence.

"We're glad we have inventory because it's been flying out the door."

He says Berkshire Hathaway is a "net hiring" right now, and that's happening because there is renewed demand for the products its subsidiaries make.

But he notes that Berkshire's residential housing businesses are lagging, due to a hangover of demand in that market. He thinks that housing inventory will be gone within a year.

Buffett again warns that the U.S. government will need to reduce its enormous deficits and says the country faces potentially significant inflation in the years to come.

As for the national debt problems in Europe, Buffett says he doesn't know "how that will turn out" but it is an "interesting movie to watch."

Still, he says, "I don't like betting on the future purchasing power of any currency."

Buffett was interviewed live on Squawk Box by Becky Quick in a Burlington Northern dining car after this weekend's Berkshire Hathaway shareholders meeting drew over 40,000 people to Omaha.

Current Berkshire stock prices:

Class B:

Class A:

For more Buffett Watch updates follow alexcrippen on Twitter .

Email comments to buffettwatch@cnbc.com

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  Sunday, 2 May 2010 | 2:18 PM ET

Warren Buffett's Goldman Defense Grabs Day-After Headlines

Posted ByAlex Crippen
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Warren Buffett's strong defense of Goldman Sachs against SEC accusations of fraud dominates the day-after headlines from coverage of this year's Berkshire Hathaway shareholders meeting in Omaha.

The New York Times calls Buffett's support for Goldman "full throated" but also notes that Charlie Munger "tempered his boss’s kind words," saying a company needs to behave both legally and ethically.

The Wall Street Journal reports Buffett's defense of Goldman received a "tepid" reaction from the crowd of roughly 18,000 inside the Quest Center Omaha. "While a number of comments by the Berkshire chairman in the morning were greeted with strong applause by the crowd—almost entirely made up of Berkshire investors—his comments on Goldman were largely met with silence."

The UK's Guardian newspaper writes that despite Buffett's reputation as "friendly, folksy billionaire next door," when "push came to shove, the world's third-richest man aligned himself firmly with the big beasts of Wall Street."

Omaha's World-Herald focuses its lead article on Buffett's belief that Berkshire has been designed to be a "lasting model that makes the most of the American economic system and will continue to prosper long after he's gone."

And the video report from Omaha's NBC affiliate , WOWT-TV, focuses on young entrepreneurs who set up a lemonade stand opposite Buffett's famously unpretentious home, selling to the sightseers stopping by for a glimpse. The sliding price scale: “$1,000 (for) Billionaires, $100 (for) Millionaires, 50 cents (for) New B Shareholders.”

Some examples of the global day-after coverage:

New York Times:Buffett Offers Supports of Goldman at Meeting

Wall Street Journal:
Buffett Defends Goldman; Berkshire Posts Profit

Fortune: Buffett backs Goldman Sachs

Financial Times (UK): Buffett stands behind Goldman Sachs

The Guardian (UK): Warren Buffett '100%' behind Goldman Sachs' chief Lloyd Blankfein

The Telegraph (UK): Warren Buffett backs Goldman Sachs over fraud allegations

Xinhua (China):
Buffett says he 100 percent behind Goldman Sachs , Buffett says China amazing economy

Omaha World-Herald
: Berkshire: In for the long haul

WOWT-TV, Omaha: Warren Buffett Doesn't Disappoint

Current Berkshire stock prices:

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  Saturday, 1 May 2010 | 2:01 PM ET

Warren Buffett to CNBC: Goldman Sachs Has "Lost the PR Battle At This Point"

Posted ByAlex Crippen
Warren Buffett spoke to reporters Saturday morning in Omaha before his annual meeting with Berkshire Hathaway shareholders
CNBC
Warren Buffett spoke to reporters Saturday morning in Omaha before his annual meeting with Berkshire Hathaway shareholders

Warren Buffett tells CNBC that Goldman Sachs "has lost the PR battle at this point" as it responds to SEC accusations , but he does not think the firm has committed fraud.

In a taped interview with Becky Quick ahead of today's Berkshire Hathaway shareholders meeting in Omaha, Buffett says Goldman has suffered because it did not respond quickly enough to the announcement of the SEC's complaint against the firm.

Current price:

While he notes that Goldman wasn't told in advance about the SEC's action, and he understands that there can be delays as lawyers and others get involved in drafting a response, "I would have tried to write something in a couple of hours at the most, because you miss that (news) cycle and then the other side has defined the issue."

But Buffett says that from everything he knows about the deal at the center of the SEC's case, Goldman Sachs did not commit fraud. He thinks the American people will make a fair judgment once they have all the facts.

Here's the video and a transcript of Becky's conversation with Buffett Saturday morning.

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  Saturday, 1 May 2010 | 10:32 AM ET

Warren Buffett Defends Goldman Sachs At Berkshire Shareholders Meeting, "Loves" Investment

Posted ByAlex Crippen
100501_2010_QandA.jpg

Warren Buffett is defending Goldman Sachs before shareholders at the Berkshire Hathaway annual meeting in Omaha, saying, "It's hard for me to get terribly sympathetic" with the alleged victim in the SEC's case against the Wall Street giant.

He began his marathon 5-hour (excluding lunch break) question-and-answer session with a lengthy explanation of the Goldman transaction at the center of the SEC's fraud allegations against the firm, using a Berkshire deal involving Lehman as an example.

While he concedes the SEC's accusations have "hurt" Goldman's reputation, he does not "hold against Goldman" the fact that it has been sued by the SEC. The Justice Department has also opened a criminal inquiry into Goldman's trading.

Buffett says it shouldn't matter who is on the other side of a deal, and adds it's "hard for me to get terribly sympathetic" for ABN Amro, the firm identified by the SEC as the victim in the Goldman case.

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  Friday, 30 Apr 2010 | 5:33 PM ET

What Will Warren Say?

Posted ByLee Brodie

As the financially faithful descend on Omaha for Berkshire’s annual shareholder meeting, what will Warren Buffett say to them about Goldman Sachs?

Goldman Drama

"I expect to get multiple questions about Goldman, and I'll give extensive and complete replies," Buffet told the Wall Street Journal in an interview published on Friday.

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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.