I am still not sure how Berkshire can only partially mark its equity portfolio to market....
While it is certainly encouraging that they are marking some positions to market, it seems that they are resisting markdowns on Wells Fargo and Kraft (surprising that they would not mark down Kraft in particular because high food prices will ultimately reduce margins or lead to increased product prices and resultant switching away from their name brands....as for Wells Fargo, if anyone can really analyze any of the major banks, please let me know!)
From the Bloomberg article: “As a result of our discussions, we recognize that the staff” of the SEC believes that impairments on the investments may be required according to generally accepted accounting principles, Berkshire Chief Financial Officer Marc Hamburg wrote.
Not a particularly strong endorsement of the GAAP which companies other than Berkshire are required to follow....
From Bloomberg news...
Berkshire Wrote Down U.S. Bankcorp, Swiss Re After SEC Query
(Updates with Berkshire refusing to write down Wells Fargo, Kraft in the fourth paragraph.)
By Andrew Frye
March 28 (Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc. wrote down the value of holdings in U.S. ancorp, Sanofi- Aventis SA and Swiss Reinsurance Co. after a query from the Securities and Exchange Commission over valuations.
The adjustments to the equity stakes were made to Berkshire’s fourth-quarter results in its annual Form 10-K
report, according to a Feb. 4 letter from Omaha, Nebraska-based Berkshire to the regulator. The letter was filed today on the SEC’s website.
“As a result of our discussions, we recognize that the staff” of the SEC believes that impairments on the investments may be required according to generally accepted accounting principles, Berkshire Chief Financial Officer Marc Hamburg wrote.
Berkshire, which held $61.5 billion of equities as of Dec. 31, was asked by the SEC in January for more information about stockholdings that traded below the prices paid by the company. The firm recorded equity impairments of $938 million in the fourth quarter. Berkshire told the SEC that it wasn’t writing down its holdings of Kraft Foods Inc. and Wells Fargo & Co. because it expects the stocks recover.
continued here...
Berkshire Wrote Down U.S. Bankcorp, Swiss Re After SEC Query
