The Digest #183
Daily Journal, Apple, Costco, Moody's, Munger's wisdom, Tesla's narratives, Tim Urban on writing, Rivian, AI's morality, AI bubble?, How James Longstreet defied the South after the war ...
Berkshire’s Ownership of Occidental Exceeds 20%
Accounting treatment for 20% positions has varied over the years, as we can see from the cases of BNSF, Moody's, DaVita, KraftHeinz, and American Express ...
Lou Simpson’s Retirement Prompts Berkshire Portfolio Changes
Berkshire Hathaway’s equity portfolio underwent significant changes during the fourth quarter of 2010 due to Lou Simpson’s retirement from GEICO. Although most media reports attribute Berkshire Hathaway’s portfolio moves exclusively to Warren Buffett, a significant portfolio has long been managed ...
Was Buffett Too Easy on Moody’s in FCIC Testimony?
Warren Buffett testified yesterday before the Financial Crisis Inquiry Commission along with Moody's Chairman and CEO Raymond McDaniel. The purpose of the hearing was to probe the failure of the rating agencies to accurately rate securities associated with subprime housing ...
Credit Rating “Vigilantes” May Impose Fiscal Discipline
Those who followed politics in the early 1990s will recall the impact that “bond market vigilantes” had on the Clinton Administration’s fiscal policies. Will credit rating agencies replace the bond market as a form of fiscal discipline in the years ...
Morningstar Enters the Credit Ratings Fray
Morningstar has announced the launch of its corporate credit ratings initiative which will initially cover 100 companies with plans for expansion to 1,000 companies as additional credit analysts are hired in the coming months. As we have discussed in recent ...
Credit Rating Moats Keep Shrinking
The Wall Street Journal has reported that certain debt issuers, including Heineken N.V. and Credit Suisse Group, have been able to sell bonds without obtaining traditional credit ratings on the securities: While small in scope so far, the deals indicate ...
How Badly Damaged Is Moody’s Economic Moat?
As one of only a select few ratings agencies granted the status of a "Nationally Recognized Statistical Ratings Agency" by the Securities and Exchange Commission, Moody's has long enjoyed a significant economic moat. Obviously, by granting selected agencies official "recognition", ...
Moody’s: Berkshire’s Credit Default Swaps Overstate Risks
According to a Bloomberg article posted today, Moody's has come to the conclusion that credit default swaps tied to Berkshire Hathaway debt significantly overstate underlying risks. Moody's, which downgraded Berkshire Hathaway's credit rating in April, makes some observations that seem ...
Coca Cola CEO Muhtar Kent on Moody’s Upgrade and Future Prospects
Muhtar Kent was named CEO of Coca Cola in 2008 and was recently named Chairman of the Board of Directors. I have not had an opportunity to listen to Mr. Kent speak about the company in the past and found ...
Improved Credit Rating Firms Oversight Cannot Substitute for Investor Vigilance
The well publicized failures of the credit rating agencies in recent years was the subject of intense scrutiny today at the SEC Roundtable on Credit Rating Agencies today in Washington DC. However, none of the reform proposals relieve investors of ...
Moody’s Downgrades Berkshire Hathaway
So much for the conspiracy theories! Moody's, which is 20% owned by Berkshire Hathaway, today downgraded the long term issuer rating of Berkshire two notches fromAaa to Aa2, and the Issuer Financial Strength (IFS) rating of most of the insurance ...