Tuesday, December 18, 2007

Fast Money's Jeff Macke Blasts Barron's Over "Sell Buffett" Call (BRK.A) Reactions to Barron's Cover Story on Berkshire-Hathaway

From CNBC's Warren Buffet Watch:
"This stock is still up 25 percent year-to-date. He has taken the steel-toed boots to the S&P yet again, in his folksy, avuncular, heart of a freakin' riverboat gambler type of way. Love the guy. Don't short Buffett because Barron's tells you to. I'm still waiting for the EchoStar deal they promised."
Also from WBW:
Berkshire Hathaway Shares Down 5% As Barron's Says Sell, But Bulls See Buying Opportunity
Berkshire Hathaway shares closed down 4.6 percent today (Monday) at $136,400 after a cover story in Barron's over the weekend recommended, "Sell Buffett: Sorry, Warren, Your Stock's Too Pricey." That erased just over $7 billion in Berkshire's market value in one day. Buffett-Bulls, however, see a buying opportunity in today's decline....MORE
Here's the Barron's story:

Sorry, Warren, Your Stock's Too Pricey


The Class A shares of his Berkshire Hathaway (ticker: BRK-A) have surged 30% since Aug. 1, to $143,000, after hitting a record $151,650 last week. Berkshire now has a stock-market value of $220 billion, ranking it sixth in the U.S., behind only ExxonMobil (XOM), General Electric (GE), Microsoft (MSFT), AT&T (T) and Procter & Gamble (PG) -- and above such heavyweights as Johnson and Johnson (JNJ) and Google (GOOG).

The Berkshire rally reflects the company's haven status; it's dodged the mortgage and credit problems that are causing billions of dollars of losses at financial institutions including Citigroup (C), UBS (UBS) and Merrill Lynch (MER). While many of these battered companies are being forced to raise capital, Berkshire enviably holds $39 billion in cash. Some of the recent strength in Berkshire reflects Wall Street's expectation that Buffett, its CEO and controlling shareholder, will put some of that in an attractive investment in a financial company. Buffett might even buy his long-sought "elephant" -- a $10 billion-plus acquisition -- on the cheap....MORE

Here's The Aleph blog:

Not Dissing Warren the Wonderful

Look, Barron’s can say what they want about Warren Buffett, and his company Berkshire Hathaway, but I have just one thing to say here: Berky is the ultimate anti-volatility asset. When the hurricanes hit in 2005, I told my boss that the easy money, low-risk, low-reward play was to buy Berky. My boss liked to take risks, so that idea was shelved. Too bad, it was easy money. After all, who could write retrocessional coverage (Reinsuring reinsurers) except Berky? Every other writer was broke or disabled…

Now we have a different type of hurricane. Prior bad lending practices are destroying lending/insurance capacity in mortgages and elsewhere. This could be an investment opportunity for Berky. Thing is, outside of the Sovereign Wealth Funds, Berky has one of the biggest cash hoards around, and during times of panic, where assets get sold at a discount, cash is valuable.

So during times of panic, we should expect Berky’s valuation to expand. This is one of those times....MORE