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Warren Buffett News: Warren Buffett and The Art of Losing Money in Airlines

BERKSHIRE HATHAWAYWarren Buffett and the art of losing money in airlines (Business-Standard)
Airline stocks have little history of creating wealth globally for shareholders. The airline business requires huge capital (expensive aircraft) and has high fixed costs (the cost of flying remains the same even if the plane flies empty). After the deregulation in most countries, it has been a story of excessive competition of a commodity product (seat) with lack of differentiation that has driven several airlines to bankruptcy, some of them many times over. But the glamour of the business keeps attracting new investors to set up airlines. Charlie Munger, vice-chairman at Berkshire Hathaway and Warren Buffett’s partner, said in 2008, “The net amount of money that’s been made by the shareholders of airlines since Kitty Hawk is now a negative figure.” This is saying a lot for an essential service and a business that’s been in existence for nearly a century.

Buffett’s ‘Secret’ Reveals 5 Stocks to Buy (TheStreet)
Warren Buffett’s got a secret. It’s a value investing metric that too many investors ignore today — and it’s spitting out a handful of stocks right now that are worth buying. The metric? It’s book value growth. Sure, plenty of investors look at book value stats (book value per share and price-to-book are the two most popular), but most use it to measure a company’s book value at a specific point in time: now. Instead, looking at how book value changes over time can tip investors off to firms that are creating the most real fundamental value for shareholders, no matter what’s going on in the stock market. Book value growth is a metric that’s highly thought of by legendary value investors such as Buffett and Ben Graham — and it’s a stat that Buffett’s own Berkshire Hathaway Inc. (NYSE:BRK.B) has embodied. The firm has generated annualized book value growth of 19.8% since 1965, besting the S&P 500 by more than double.

Stifel Nicolaus ups profit estimate for Berkshire (MarketWatch)
Analysts at Stifel Nicolaus on Tuesday hiked their third-quarter earnings estimate for Warren Buffett’s holding company, Berkshire Hathaway (US:brka)(US:brkb) on expected strong results its Geico and other insurance units, as well as other strengths. Analysts now forecast Berkshire to earn $2,133 a share in its fiscal third quarter, up from their earlier estimate of $1,974 a share and above the analyst consensus target of $2,009 a share. They also increased their 2013 profit target for the company to $8,512 a share from $8,273 a share. Despite Hurricane Isaac, third-quarter global catastrophes are likely to come in under trend in a boost to Berkshire’s reinsurance business, analysts said. Total unit volume at Burlington Northern Santa Fe rose 5.7% on an uptick in coal volume.

Eichorst sounds good, but success rests on football results (Omaha)
Shawn Eichorst took the microphone and ran for daylight. He referred to Tom Osborne as “Coach Osborne” and a “legend.” He quoted Warren Buffett in Osborne’s latest book, with Buffett calling Osborne “a man of character.” He said he looked forward to improving his life by working with Osborne. He described growing up on a farm in southwest Wisconsin. He talked about “family, church, school and work.” He talked about bailing hay, feeding pigs, milking cows and detasseling corn.

Stocks for the Long Run: H.J. Heinz vs. the S&P 500 (DailyFinance)
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 individual stocks have performed against the broad S&P 500. Step on up, H.J. Heinz Company (NYSE:HNZ) .

Warren Buffett, Jeff Bezos, Larry Ellison All Lose More Than Half A Billion On Bad Day For World Economy (Forbes)
Five of the world’s richest men lost more than half a billion each on Tuesday, as sagging tech stocks and the chugging global economy pulled their net worths down. Amazon chief Jeff Bezos was Tuesday’s biggest loser: his fortune dipped by $711 million as Amazon shares dropped 3% over the prior day. Larry Ellison saw his net worth sink $577 million along with Oracle , which fell 1.7% today. Robin Li, founder of Baidu, watched his net worth drop $567 million, and Warren Buffett sank $532 million in net worth terms.

Mainstreet Equity 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 Mainstreet Equity Corp. (TSE:MEQ) entered into oversold territory, hitting an RSI reading of 24.5, after changing hands as low as $29.74 per share.

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