Investors are wondering if Warren Buffett has lost his touch. They are bailing out of Berkshire Hathaway Inc stock and have lost some Warren Buffett Tycoons with a golden heart Old Horses of India Inc Modern Moguls confidence that the insurance and investment company, run by one of the world’s most admired investors since 1965, can pay its debts.
Berkshire stock has lost close to half its value since hitting a record high last December, as the company struggles with lower returns at its insurance businesses, the declining value of its stock holdings, and paper losses on derivative contracts.
Meanwhile, the cost of protecting Berkshire’s ‘triple-A’ rated debt has soared to a level more befitting a ‘triple-B’ or even a junk-rated company. Omaha, Nebraska-based Berkshire has nearly 80 businesses -- from car insurance to carpeting, clothing, food, kitchen utensils, and manufactured housing -- and owns tens of billions of dollars of stock.
Buffett’s empire is diversified enough so that at any given moment many parts are unlikely to run on all cylinders. “Everything you’re seeing that affects other companies is eventually going to catch up with Berkshire,” said Vahan Janjigian, author of the 2008 book “Even Buffett Isn’t Perfect.” “I’m not saying Berkshire is not well-run, but that even well-run companies will be hit in a severe recession.” (Reuters)