Warren Buffett News: Buffett is Betting on a Recovery

BERKSHIRE HATHAWAYCarlos Slim, Warren Buffett, and Larry Ellison–Who Just Bought Lanai–Each Lost $700 Million Thursday (Forbes)
Tough day in the markets Thursday for three of the world’s wealthiest men: Carlos Slim Helu, the world’s richest man; Warren Buffett, who ranks third on the Forbes Billionaires List; and Oracle CEO Larry Ellison each saw their net worths drop close to $700 million. Ellison’s net worth drop comes amid the most colorful billionaire news of the week: he has just purchased nearly the entire island of Lanai.

Buffett is betting on a recovery (SMH)
Master investor Warren Buffett — the world’s third-richest man, with a personal fortune recently estimated at $US44 billion — is renowned for making big, bold bets on the future direction of the US economy. For example, the giant conglomerate Buffett runs, Berkshire Hathaway (NYSE: BRK-A, BRK-B), bought Burlington Northern Santa Fe — one of America’s biggest railroads — for $US44 billion in February 2010. In September 2011, Buffett followed this by spending $US9 billion buying industrial lubricant maker Lubrizol.

Business Plans for Warren Buffett (TheHour)
Last month, Brian Froehlich and Laura Ploss, Residents of Wilton and employees of By Kids For Kids, Co. in Stamford orchestrated a Grand Prize Judging Event where more than 3,000 kids from all over the country submitted their business plans to Warren Buffett’s Secret Millionaires Club “Grow Your Own Business Challenge,” sponsored by CreditReport.com. The finalists – five individuals and three teams – presented their ideas to Mr. Buffett and a panel of judges on May 21 in Omaha, NE. The winning team members and the winning individual received a grand prize of $5,000.

Passing The Baton At Berkshire (SFGate)
In 47 years of performance from 1965 to 2011, Berkshire Hathaway’s book value has blitzed the S&P 500 in all but eight years, turning in a 19.8% annual gain versus the S&P’s 9.2%. For many Berkshire shareholders, this performance is the result of one man’s savvy, Warren Buffett; and with succession plans lingering, many wonder, will the returns continue?…Succession at Berkshire has been a major shareholder topic of discussion for some time now. In the 2007 annual shareholder letter, Buffett said that were he to die “tonight,” the company would have three outstanding candidates for the CEO role, half of his job. The investment role however, had yet to be filled.

Bonterra Energy Corp is Now Oversold (Forbes)
Legendary investor Warren Buffett advises to be fearful when others are greedy, and be greedy when others are fearful. One way we can try to measure the level of fear in a given stock is through a technical analysis indicator called the Relative Strength Index, or RSI, which measures momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30. In trading on Thursday, shares of Bonterra Energy Corp (Toronto: BNE) entered into oversold territory, hitting an RSI reading of 28.5, after changing hands as low as $41.46 per share. By comparison, the current RSI reading of the S&P/TSX Composite Index is 41.9.

Caution: even Warren Buffett loses money in airline stocks (EmergingMoney)
Airline stocks like China Eastern Airlines (CEA, quote) and Tam SA (TAM, quote) may look attractive to emerging market investors, but consider the economics of the industry first. Even the big players can get burned. The need for caution buying airline stocks was underscored by a recent study conducted by consulting firm Oliver Wyman for the Wall Street Journal.

Millionaire Towns For Obama (Forbes)
Hit me! Tax me! Raise rates on millionaires! Some rich people favor politicians who want taxes to be higher on rich people like themselves. You are particularly likely to encounter these chic liberals in California’s Beverly Hills and Santa Monica or in New York’s Tribeca, Millbrook and Amagansett.

4 Rules of Dividend Investing – Investment Ideas (Nasdaq)
You’ve probably heard the story of how Warren Buffett picked up shares of Coca Cola ( KO ) in the late 1980s through Berkshire Hathaway at a split-adjusted price of just $5.48 per share. While the stock has soared since then, what often gets overlooked is that Coke has increased its dividend every year since then at a compound annual rate of 11%. This means that Berkshire now collects an annual dividend of $2.04 per share for a remarkable 37% yield on cost!

When the “Oracle of Omaha” Warren Buffett recently began an interview with Becky Quick on CNBC’s Squawk Box the intended topics were the state of the US economy and the stock market. However the topic of conversation soon turned to the US real estate market where Buffett said “If I had a way of buying a couple of hundred thousand single family homes and had a way to manage them…..i would load up on them”. This was a pretty forthright view from one of the world’s greatest investors particularly as Berkshire Hathaway has hardly any exposure to the american investment property market. Phil Gerathy of USA Foreclosures agrees with Buffet but wonders why the real estate management is holding him back,Gerathy says “We manage a range of US investment property for Australian clients using our Michigan based team. Once you establish a strong system of vetting potential tenants, rent collection and managing the upkeep of the properties it is just like any other business, it requires good people and good systems.

Warren Buffett and everything else versus gold (Benzinga)
We discussed Warren Buffett’s illogical opinions about gold in our February 15, 2012, report under the heading “Buffett’s Blind Spot.” Today we are going to take a quick look at Buffett’s personal war against gold from a different angle and arrive at conclusions that might surprise you. Some gold bulls have cited the performance of Berkshire Hathaway (NYSE: BRK.B, Stock Forum) relative to gold as proof of Buffett’s cluelessness about gold.