Buffett watchers prepare for weekend at Warren's, anticipating Berkshire annual report
It's been a tumultuous year for Berkshire Hathaway, which owns scores of businesses, including several insurance companies, and controls billions of dollars in stock and bond investments in some of the best-known companies in the world. Look for Buffett to discuss some of his high-profile holdings and the performance of his portfolio companies.
Here are five things to watch for:
1. Buffett's banks: The Oracle of Omaha waded hip-deep into the financial tsunami last year by taking a big stake in Goldman Sachs (GS). He also owns Bank of America (BAC), US Bancorp (USB) and Wells Fargo (WFC) shares. It's certainly not Buffett's first brush with Wall Street's woes -- he plowed $700 million into Salomon Brothers in the 1980s and stepped in to run the firm after it was rocked by scandal. He later described the experience as "far from fun." What's his take this time?
2. Berkshire's stock price: Owning a share of Berkshire Hathaway (BRK.A) is as much a status symbol as it is an investment. But the company's ultra-expensive Class A shares have lost some of their luster as their price has plummeted. After trading as high as $151,650 on December 11, 2007, they've fallen 48 percent to $78,950. (The S&P 500 has fallen 49 percent over the same period.)
Maybe the company didn't do as well last year as its shareholders might have liked, but does its performance justify such a steep drop? Look for Buffett to discuss Berkshire Hathaway's book value per share, which will help answer this question.
3. Selling out: Buffett made waves by selling some of his positions in Johnson & Johnson (JNJ), Procter & Gamble (PG) and ConocoPhillips (COP). Some observers think he might have done so to shore up Berkshire's cash position after taking stakes in Goldman and General Electric (GE), among other moves. The letter to shareholders may explain these moves.
4. The portfolio companies: From Geico to Fruit of the Loom to Dairy Queen, Berkshire Hathaway owns companies in many different economic sectors. How is the recession affecting them? And what about Berkshire Hathaway Assurance, the government bond insurer he launched after that industry's biggest players were rocked by the credit crunch?
5. Plain English: To be sure, much of Buffett's appeal comes not just from his incredible success as a businessman and investor, but from his ability to explain his approach in language that you don't need an MBA in finance to understand. It's a big reason so many people will wake up early on Saturday morning to read it, whether or not they own Berkshire Hathaway shares.