Warren Buffett News: Timeless Principles From A Market Guru

BERKSHIRE HATHAWAYChubb Beats Buffett After Mocking AIG: Riskless Return (Bloomberg)
Chubb Corp. (CB), which mocked rivals for receiving federal aid during the 2007-2009 financial crisis, is leading the largest publicly traded U.S. insurance firms by producing the highest risk-adjusted return. Chubb climbed 1.52 percent in the five years through yesterday after adjusting for price swings, beating every stock in the 22-company Standard & Poor’s 500 Insurance Index, including Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), according to the BLOOMBERG RISKLESS RETURN RANKING. Fellow non-life insurers Travelers Cos. and Ace Ltd. (ACE) came in second and fourth, with gains of 0.92 percent and 0.75 percent, respectively. Aon Plc, a London-based broker, was third.

Warren Buffett Likes Newspaper Stocks — Should You? (Forbes)
That old coot in Omaha is buying newspapers, after swearing a few years back he wouldn’t. For Berkshire Hathaway (BRK.A) (BRK.B) holders, this is at worst a small diversion, given the amounts involved, and at best a reminder that Warren Buffett can find the gems in a pile of junk. But don’t try this at home. No-one advertises in newspapers anymore, and digital advertising doesn’t pay the bills. Rupert Murdoch’s News Corp. (NWS) is finally sending its papers off to a separate company, and young readers are used to getting news for free.

How Coca-Cola’s Stock Split May Upset Warren Buffett (NSDDAQ)
On Tuesday, shareholders of Coca-Cola (NYSE: KO ) approved a two-for-one stock split that will increase the number of shares to 11.2 billion. This is Coca-Cola’s first stock split in 16 years and the 11th total in the company’s 92-year history. In a company release, Coca-Cola stated that, “[t]he record date for the stock split is expected to be July 27, 2012, with new shares expected to be distributed on or about Aug. 10, 2012. Each shareowner of record on the close of business on the record date will receive one additional share of common stock for each share held.”

Buffett Firm Says Safe-Nation Bonds Are Way To Grow Poor (Bloomberg)
General Re-New England Asset Management Inc., a unit of Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), said sticking with the bonds of the nations perceived to have the best credit will drain wealth as inflation saps value. “Sovereign bond yields in putatively safe countries are an excellent way to grow poor, at accelerating rates over time,” GR-NEAM Chief Investment Officer John Gilbert wrote in a newsletter on the unit’s website.

BHP, Rio near the top of transparency rankings (SMH)
Australian biggest miners head the rankings when it comes to transparency among major global companies, according to corporate governance watchdog, Transparency International. Billionaire Warren Buffett’s main investment vehicle was ranked among the least transparent. Rio Tinto and BHP Billiton are ranked second and third respectively on the transparency in corporate reporting index, behind only Norwegian oil and gas company Statoil.

Stocks for the Long Run: Kimberly-Clark vs. the S&P 500 (MSN)
Investing isn’t easy. Even Warren Buffett counsels that most investors should invest in a low-cost index like the S&P 500. That way, “you’ll be buying into a wonderful industry, which in effect is all of American industry,” he says. But there are, of course, companies whose long-term fortunes differ substantially from the index. In this series, we look at how members of the S&P 500 have performed compared with the index itself. Step on up, Kimberly-Clark.

Imperial Metals Corp Becomes 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 Tuesday, shares of Imperial Metals Corp (Toronto: III) entered into oversold territory, hitting an RSI reading of 29.7, after changing hands as low as $8.85 per share. By comparison, the current RSI reading of the S&P/TSX Composite Index is 47.4. A bullish investor could look at III’s 29.7 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side.

How Berkshire Hathaway Got Bigger by Getting Better (Part Four) (Beta)
In the third part of an ongoing saga loosely based on a story inspired by Chick-fil-A founder Truett Cathy I went through two additional principles from Warren Buffett’s “Owner’s Manual” for Berkshire Hathaway (NYSE: BRK-B) shareholders. If you haven’t heard the story yet, back in the 1980’s when a Boston Chicken (now Boston Market) had just finished raising capital to expand; the management at Chick-fil-A spent a long time discussing how they too could get bigger in order to fend off this threat. After hearing enough talk about getting bigger, Cathy pounded the table and said, “I am sick and tired of listening to you talk about how we can get bigger. If we get better, our customers will demand we get bigger.” With few better case studies on management out there than Warren Buffett, we’re sure to become better investors by listening to his words of wisdom.

Obama says he and Romney don’t need tax cuts (USAToday)
President Obama touted his tax cut plan today by citing some people who would benefit from an extension of all the George W. Bush tax cuts — including himself and opponent Mitt Romney. “To give me another tax break, or to give Warren Buffett another tax break, or to give Mitt Romney another tax break — that would cost about a trillion dollars” in the federal budget, Obama told people in Cedar Rapids, Iowa.

Timeless Principles From A Market Guru (SeekingAlpha)
Whether it is a value strategy or a growth strategy, successful investing is dependent upon identifying opportunities and executing on them before the crowd rushes in. In 1976, Warren Buffett purchased Geico Insurance Co. stock for $2 per share during a downturn, saw improvement in operations, and eventually took over full control of the company. Geico has been a profitable part of Berkshire Hathaway (BRK.B) since that time.