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Investing Warren Buffett Watch

  Wednesday, 30 Aug 2017 | 11:40 AM ET

Warren Buffett on Wells Fargo: 'There's never just one cockroach in the kitchen'

Billionaire investor Warren Buffett told CNBC on Wednesday that when one puts a spotlight on a large financial institution like Wells Fargo, they're likely to find something.

"What you find is there's never just one cockroach in the kitchen when you start looking around," the chairman and CEO of Berkshire Hathaway said on "Squawk Alley."

Earlier this month, Wells Fargo CEO Timothy Sloan warned his employees to brace for more negative headlines as a third party completes a review of the bank's sales scandal.

The results will "generate news headlines," Sloan said, and the "best thing" for the bank to do is to "stay focused on fixing problems."

"Anytime you put focus on an organization that has hundreds of thousands of people ... you may very well find that it wasn't just the one who misbehaved that you find out about," Buffett said.

Buffett said Wells Fargo's recent woes aren't likely to influence his investment long term. "It's a terrific bank," he said. "There were some things that were done very wrong there but they are being corrected."

In response, a Wells Fargo spokesperson said: "We value Berkshire Hathaway as a long-term shareholder and customer. Our top priority is rebuilding the trust of our customers, team members, community partners, and shareholders. We have taken decisive actions to fix the problems, make things right for customers, and build a better Wells Fargo."

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  Wednesday, 30 Aug 2017 | 11:00 AM ET

Warren Buffett: This doesn't feel like a 3% GDP economy

Billionaire investor Warren Buffett told CNBC on Wednesday that U.S. economic growth does not feel like 3 percent.

The 3 percent threshold is what President Donald Trump and his administration want to achieve for gross domestic product growth.

The government reported on Wednesday that GDP increased at a better-than-expected 3.0 percent annual rate in the second quarter. The upward revision from the 2.6 percent pace reported last month reflected robust consumer spending as well as strong business investment. Economists had expected a 2.7 percent advance.

"I would guess we're in a 2 percent growth economy now," Buffett said in interviews on "Squawk Alley" and "Squawk on the Street." "Every now and then we think it's accelerating. And every now and then that maybe there's a double dip or something. It just seems to be a couple of percent."

"If we have 2 percent for a generation, 25 years, you would have a $19,000 GDP gain per person in the United States," added the chairman and CEO of Berkshire Hathaway.

Growth last quarter, according to the Commerce Department, was the strongest since the first quarter of 2015. It followed a 1.2 percent pace in the first quarter of 2017.

— Reuters contributed to this report.

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  Wednesday, 30 Aug 2017 | 10:56 AM ET

If Harvey's uninsured losses top $150 billion that would hurt the economy, Warren Buffett says

Billionaire investor Warren Buffett said Wednesday that if uninsured losses from Hurricane Harvey top $150 billion it would hurt the economy.

"I don't think it would be a full percentage point for a year or anything like that. But it has a real effect. It destroys wealth. If there's $150 billion, or something, of uninsured losses that's real wealth," the chairman and CEO of Berkshire Hathaway said on CNBC's "Squawk on the Street."

The billionaire investor spoke as Harvey bore down on eastern Texas and Louisiana on Wednesday, bringing the catastrophic downpours that paralyzed the nation's fourth largest city.

Moody's Analytics is estimating the economic cost from Harvey for southeast Texas at $51 billion to $75 billion.

Buffett added the government flood program will be a lot further in the hole once Hurricane Harvey is over.

"It's sort of unbelievable," he said. "I wouldn't be surprised if we had 50,000 losses and most of them will be in total losses."

Buffett, who turned 87 on Wednesday, was in New York City for a private lunch with the winner of an annual auction to benefit Glide, a San Francisco-based homeless charity. The winner, who wishes to remain anonymous, paid $2,679,001.

—Reuters contributed to this report.

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  Wednesday, 30 Aug 2017 | 9:48 AM ET

Warren Buffett is 87 today—here's what he learned from buying his first stock at age 11

Berkshire Hathaway chairman and CEO Warren Buffett is 87 today.

The legendary investor, who has amassed a fortune of more than $75 billion over his career, got into the investing game early on. He bought his first stock, shares of Cities Service for $38 apiece, at age 11.

What he's learned since that purchase in 1942 is to buy, hold and not watch the markets too closely.

"No matter what the headlines say … American business is going to do fine over time," Buffett tells Judy Woodruff of PBS NewsHour. "Occasionally we go off the tracks with bubbles … but it will never permanently derail us."

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  Wednesday, 23 Aug 2017 | 8:53 PM ET

This former Facebook employee is trying to build the next great investing company like Warren Buffett

Posted ByAri Levy

Venture capitalist Chamath Palihapitiya is about to try his hand at being Warren Buffett. Or something like him.

Palihapitiya, the founder of Social Capital and former member of the senior executive team at Facebook, is listed as CEO of a new "blank check company" called Social Capital Hedosophia Holdings, according to a filing with the Securities and Exchange Commission on Wednesday.

The holding company is aiming to raise $500 million in an IPO to then go out and acquire emerging private businesses that have little incentive to go public themselves — because of the hassle of quarterly earnings, gyrating stock prices and the constant questions over how they'll compete with Amazon and Facebook.

For reference, just check out the stock charts of Snap and Blue Apron.

"Our mission is to create an alternative path to a traditional IPO for disruptive and agile technology companies to achieve their long-term objectives and overcome key deterrents to becoming public," the filing said.

Palihapitiya has long criticized the traditional venture model and expressed his admiration for Buffett, who has spent more than 50 years building Berkshire Hathaway into a giant publicly-traded holding company, filled with food businesses, insurers and industrial brands.

At a StrictlyVC event in 2015, Palihapitiya said that Social Capital is going to be more like a "bastard stepchild of Berkshire Hathaway and Blackstone and BlackRock" than a traditional venture firm.

One big difference, though, is that Buffett has largely avoided tech companies because he's struggled to figure out how to value them. Palihapitiya's endeavor is all about uniting "technologists, entrepreneurs, and technology-oriented investors," the filing said.

The Wall Street Journal reported earlier, citing people familiar with the matter, that Palihapitiya's team is planning to meet with investors early next month and launch the offering by mid-month on the New York Stock Exchange.

Hedosophia is a venture firm with offices in Hong Kong and London. Ian Osborne, CEO of Hedosophia, will be president of the new holding company. The rest of the management team comes from Social Capital and the board includes former Skype CEO Tony Bates and former Twitter executive Adam Bain.

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  Tuesday, 22 Aug 2017 | 11:07 AM ET

Billionaires like Buffett are chasing reliable income that comes from utilities like Oncor

Warren Buffett was poised to add Texas' largest electricity transmission and distribution network to Berkshire Hathaway's energy portfolio, but a quiet campaign by California utility Sempra Energy has spoiled the Oracle of Omaha's carefully laid plans.

The battle over Oncor highlights the value that billionaire investors like Buffett and Paul Singer assign to the businesses that move energy across America. This week, Buffett backed out of the deal after Sempra topped his $9 billion bid, a coup for Oncor bond investor Singer, who argued Berkshire's offer was too low.

The transmission and distribution business — linking power plants to businesses and residences via critical infrastructure — may not seem like the type of sector that would produce this sort of drama. But in a power industry that has been rocked by disruption from cheap natural gas and the adoption of renewable energy, the transmission business has proven relatively safe.

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  Monday, 21 Aug 2017 | 1:45 PM ET

The two oldest and biggest investor groups are battling on Wall Street right now

Posted ByTae Kim

There is an epic fight between the two major types of investors, which may determine whether the bull market can go on.

Raymond James explained how value investors, who strictly study fundamentals, and technical analysts, who only look at charts, see the world differently right now.

Market "battle lines are generally formed between those who practice more value-based fundamental analysis and those who practice price-based technical analysis," strategist Andrew Adams wrote in a note to clients Monday. "Both disciplines can obviously be used together, but most people in this business probably do lean either more one way or the other, hence the friendly friction between the two schools of thought."

Adams said fundamental value investors generally follow the philosophy of Columbia Business School professors Benjamin Graham and David Dodd, who wrote "Security Analysis" in 1934. He noted how Warren Buffett is the most famous "Graham & Dodd" believer.

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  Monday, 21 Aug 2017 | 1:37 PM ET

Warren Buffett's touching tribute to NYSE's James Maguire, 'world's greatest specialist,' dead at 86

Posted ByBob Pisani

James Maguire Sr., a titan of the Wall Street trading community, has died at age 86.

He served Wall Street for over 60 years beginning in 1949 (the Dow Industrials was 181 when he started), working on the New York and American stock exchanges.

Maguire ran the specialist firm Henderson Brothers for many years, which he sold to LaBranche around the run of the century, and was later a specialist for Barclays. He traded the stock of The Washington Post, but perhaps most famously he was the specialist for Berkshire Hathaway and was a good friend of Warren Buffett.

His kindness was legendary, which I experienced personally. When I came on the floor 20 years ago, he allowed me to stand next to him for hours to watch him trade Berkshire. He introduced me to Buffett at a time when Buffett rarely spoke to the press.

Here is what Buffett wrote to me Monday on Maguire's passing:

"As a very young kid, I was fascinated by the NYSE, an infatuation intensified by my visit there in 1940 as a 9-year-old. I read everything available about the operation of the Exchange, and even wrote a paper about the specialist system when an undergrad at Wharton.

"So when Dick Grasso came calling in the mid-1980s to talk about listing Berkshire, I was more than receptive. There were technical problems, involving a change in the 'round lot' rules, but, as you would expect, Dick found a solution. He then asked me who I would like as a specialist and after checking around it was obvious that the choice should be Jimmy.

"We immediately became the best of friends and I labeled him the 'World's Greatest Specialist.' He also was the world's greatest guy.

"Jimmy and [and wife] Diane would come out to the Berkshire annual meeting and we would have a blast. He would give me elaborate lectures — in front of Diane — warning me that she should be banned from our jewelry store. (In truth, he loved to buy her something special.) Diane likes to make customized belts and Jimmy proudly gave me a beautiful creation of hers featuring Berkshire products.

"Jimmy was an original and his passing leaves a big hole in the heart of everyone who knew him. I'll be singing 'Wait till the Sun Shines, Nellie' on New Year's Eve in his memory."

Maguire was widely respected for his wit, wisdom and leadership. He was renowned for his professorial demeanor, often wielding a baton to point to important stock information on the screen above him.

"We used to call him 'The Chief,' because he always knew the answer to everything," UBS' Art Cashin, a friend of his for many decades, told me Monday morning.

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  Sunday, 20 Aug 2017 | 10:52 PM ET

Rare Buffett loss as bankrupt company chooses rival Sempra Energy's $9.4B offer

Bankrupt Texas utility Energy Future Holdings will abandon a deal to sell power transmission company Oncor to Warren Buffett's Berkshire Hathaway for $9 billion and will accept a $9.45 billion bid for Oncor by Sempra Energy instead, people familiar with the matter said.

The development represents a rare blow for Buffett, who avoids bidding wars for companies and had swooped in two months ago to buy Oncor after two previous attempts by Energy Future to sell it were blocked by Texas regulators.

Energy Future's board decided to make the switch on Sunday after Sempra also offered assurances it could get its acquisition of Oncor approved by Public Utility Commission of Texas (PUCT), as well as a U.S. bankruptcy judge, the sources said.

Berkshire offered to allow Energy Future to keep an Oncor dividend, but that proposal was not enough to bridge the gap in price, the sources added.

The sources asked not to be identified because the decision has not yet been officially announced. Sempra, Oncor and Berkshire did not immediately respond to requests for comment.

Hedge fund Elliott Management, which is Energy Future's biggest creditor, had opposed the sale to Berkshire, arguing it undervalued Oncor and threatening to veto the deal. Elliott had also been trying to put together its own bid for $9.3 billion to buy Oncor.

Elliott has indicated it would support Oncor's sale to Sempra, one of the sources said.

Berkshire had told the PUCT it would accept "ringfencing" on its acquisition of Oncor, restricting its ability to extract cash from the company or add more debt to it. Sempra has now indicated it will also accept some form of ringfencing, according to the sources.

Dallas-based Oncor delivers power to more than 3.4 million homes and businesses through roughly 122,000 miles (196,000 km) of transmission and distribution lines.

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  Friday, 18 Aug 2017 | 3:31 PM ET

Mystery third bidder said to challenge Buffett, Singer over Texas power company

Posted ByLiz Moyer
A shift supervisor checks levels in the Oncor Mountain Creek control room which handles their entire grid for Texas in southwest Dallas.
Ron T. Ennis | The Fort Worth Star-Telegram | AP
A shift supervisor checks levels in the Oncor Mountain Creek control room which handles their entire grid for Texas in southwest Dallas.

Warren Buffett likes to buy companies without any competition, but he has found himself in the middle of a fight for the hottest power company in Texas.

A mystery third bidder has emerged for Energy Future Holding's Oncor, Dow Jones reported on Friday, citing comments picked up at a court hearing. The new bidder is offering $9.3 billion, Dow Jones reported, citing an unnamed source.

Buffett's Berkshire Hathaway has an all-cash offer on the table for $9 billion and has been battling for Oncor with fellow billionaire Paul Singer's Elliott Management, which is Energy Future Holdings' largest creditor. Last month, Elliott said it was trying to put together a group to offer $9.3 billion for the Texas-based power transmission company. It hired the deal advisory firm Moelis to help put the bid together.

In July, U.S. bankruptcy court judge in Delaware pushed back a hearing on the approval of the Berkshire offer, giving Elliott more time to solidify its bid. The hearing is now scheduled for Monday.

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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.