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Buffett's next disclosure

Feb 12, 2009

See what Buffett's been buying
As much as Warren Buffett would like to stick to his words of having an investment horizon of 'forever', the man heralded as the 'Oracle of Omaha' must disclose his holdings in Berkshire Hathaway and the performance of the same on a quarterly basis to the US Securities & Exchange Commission (SEC). Buffett is known to have evaluated companies based on their stability, competitive advantage and an enduring moat that protects excellent returns on invested capital. The man, who makes most of the investment decisions at Omaha-based Berkshire, is required to tell the regulators about changes to the firm's equity portfolio every three months. The latest report, for the quarter ended December 31 2008, is scheduled to be filed by the end of this week. It will include purchases and sales made during the worst quarter for the S&P 500 in more than two decades.

While in the first two filings during the nine months of this fiscal Berkshire reported that it spent US$ 9.5 bn on buying shares, the latest quarter found Buffett discovering other interesting opportunities for Berkshire amidst the economic turmoil. Berkshire's stock price has declined 36% in the past year and its profits have fallen in four consecutive quarters. But Buffett stands undeterred. In fact, he is also reportedly investing his own money into US stocks as prices decline amid the worst financial crisis in 75 years. Having said that, his latest deals seem to have yielded even more favourable terms as Buffett agreed to buy preferred shares in companies that would pay him dividends ranging from 12% to 15%. Are you still surprised at his reticence?

Satyam could have new owner in as early as 10 days
The government-appointed Satyam Computer's board is slated to lay down the final road map for bringing the fraud-hit firm back on rails in the next 10 days. The company's board has in the meanwhile claimed that it is in a position to pay employee salaries for the month of February mainly from receivables and temporary bank funding to the tune of Rs 6 bn. It has, however, been clarified that the prospective suitor will have to buy the company as a whole entity to avoid cherry-picking of its businesses.

Home and car loans are passé...
While banks may complain of demand for mortgage loans and auto loans having dried up, they have found a surge in borrowers from unexpected quarters. The economic recession and downturn in the job markets have had a significant impact on the educational loan portfolio of banks. Lack of lucrative job opportunities and loss of jobs have led to a surge in demand for educational funding.

Although in the organised sector itself, close to 0.5 m people having lost their jobs in the last three months (as per the Labour Bureau), banks are not anticipating any build up of non-performing assets (NPAs) in the segment given its past history of good repayment rates. In fact, with sufficient liquidity on their books and growth in demand for other categories of retail loans at 3-year lows (less than 15% YoY) banks are expecting growth in the range of 30% to 35% from this basket over the next few months.

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