http://www.businessweek.com/news/2010-03-11/slim-overtakes-gates-buffett-to-become-forbes-richest-person.html
Slim Overtakes Gates, Buffett to Become Forbes Richest Person
March 11, 2010
Chris Dolmetsch and Crayton Harrison
March 11 (Bloomberg) -- Mexico’s Carlos Slim beat Bill Gates and Warren Buffett for the top spot on Forbes magazine’s annual list of billionaires, becoming the first person from outside the U.S. to lead the rankings in 16 years.
The net worth of Slim, 70, who built a telecommunications empire after buying Mexico’s state-run phone monopoly two decades ago, rose $18.5 billion to $53.5 billion. Gates, 54, chairman of Microsoft Corp., fell to second as his net worth increased $13 billion to $53 billion. Buffett, 79, chairman of Berkshire Hathaway Inc., was third with $47 billion, a rise of $10 billion.
Slim is the first person other than Gates, last year’s richest person, or Buffett to top the list since 1994, which was also the last time a billionaire from outside the U.S. led the ranking: Japanese real estate tycoon Yoshiaki Tsutsumi.
“We’ve been watching Slim for a while and kind of wondered when the stars would align and he would take over,” Forbes senior editor Luisa Kroll said in an interview yesterday.
More than 80 percent of Slim’s holdings are held in five public stocks, she said. “His net worth really reflects how well those stocks are doing. Everything that he owns has done very, very well this year.”
Mexican shares of America Movil SAB, the wireless carrier controlled by Slim, have gained more than 56 percent in the last year, according to Bloomberg data. The company’s reach extends to 18 countries in the Western hemisphere, including Mexico, Brazil and the U.S., where it is the biggest carrier of prepaid wireless service.
Market Dominance
Slim’s Telefonos de Mexico SAB remains the biggest landline phone company in the country, with about 80 percent of the lines. His Telmex Internacional SAB, which America Movil is planning to buy, controls Brazil’s biggest long-distance and cable TV companies as well as phone and video carriers in Colombia, Peru and other South American countries.
Slim’s holdings in Mexico extend from retail, with the Sanborns department store chain, through banking and construction. Through his holding companies and investment vehicles, he holds stakes in U.S. companies including the New York Times Co., Saks Inc. and Bronco Drilling Co.
“His management of America Movil, which I believe is the principal reason for his wealth, has been exceptional,” said Jose Miguel Garaicochea, who helps manage 10 billion pesos ($793 million) in stocks, including the wireless carrier, at Banco Santander SA. “And when he has gone outside of Mexico, he has also done very well.”
Asia’s Richest
Asia’s richest person, Mukesh Ambani, 52, of India, chairman of Mumbai-based refiner and energy explorer Reliance Industries Ltd., was ranked fourth with $29 billion, up from $19.5 billion last year, when he was seventh.
Lakshmi Mittal, 59, also of India, the chief executive officer of the world’s biggest steelmaker, ArcelorMittal, rose to fifth from eighth. Mittal’s net worth increased $9.4 billion to $28.7 billion as shares of his company have almost doubled in the past year.
Larry Ellison, 65, chief executive of Oracle Corp., fell to sixth from fourth as his net worth increased $5.5 billion to $28 billion. Bernard Arnault, 61, of France, chairman and chief executive of luxury goods maker LVMH Moet Hennessy Louis Vuitton SA, rose to seventh from 15th as his net worth jumped $11 billion to $27.5 billion.
Batista’s Climb
Brazilian mining magnate Eike Batista, 53, had the biggest increase in net worth, rising to $27 billion from $7.5 billion and boosting his rank to eighth from 61st. Spain’s richest man, Amancio Ortega, 73, chairman and founder of clothing retailer Inditex SA, rose to ninth from 10th as his net worth jumped $6.7 billion to $25 billion.
Karl Albrecht, a co-founder of discount retailer Aldi Group, rounded out the list’s top 10, falling to 10th from sixth place as his net worth rose $2 billion to $23.5 billion.
The number of billionaires climbed to 1,011 from 793 last year, although still below the rankings’ high of 1,125 in 2008. Their cumulative net worth increased to $3.6 trillion from $2.4 trillion, and the average jumped $500 million to $3.5 billion as the world economy began to rebound from its worst slump since the Great Depression.
The list includes billionaires from 55 countries. The U.S. has the most with 403, up from 359 last year, while Europe follows with 248. The Asia-Pacific region has 234 people in the rankings, up from 130 in 2009, including 62 newcomers.
“The global boom that we experienced from the 1980s, particularly since the fall of the Berlin Wall in 1989, which was temporarily derailed in 2007, now looks like it’s beginning to get back on track,” the magazine’s editor-in-chief, Steve Forbes, said at a press conference in New York yesterday. “But Asia and a handful of others are surging, relatively the United States and western Europe are lagging.”
The Forbes rankings are based on information including stakes in publicly traded and privately held companies; real estate holdings; and investments in items such as art, gems and yachts; and compiled as of the close of U.S. markets on Feb. 12.
--Editors: Mark Schoifet, Don Frederick
To contact the reporters on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net; Crayton Harrison in Mexico City at tharrison5@bloomberg.net
To contact the editor responsible for this story: Jim Kirk at jkirk12@bloomberg.net
Showing posts with label Berkshire Hathaway. Show all posts
Showing posts with label Berkshire Hathaway. Show all posts
Tuesday, March 30, 2010
Friday, March 6, 2009
Buffett Says Economy Will Be ‘In Shambles’
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1L50vuf_HiM
Buffett Says Economy Will Be ‘In Shambles’ for 2009
By Rick Levinson
Feb. 28 (Bloomberg) -- Billionaire Warren Buffett said the economy will be “in shambles” for the rest of this year as financial firms take losses tied to reckless loans made during the housing boom.
The Standard & Poor’s 500 Index will probably gain in three-quarters of the next 44 years, just as it did in the period since Buffett took over Berkshire Hathaway Inc. in 1965, he said today in his annual letter to the company’s shareholders.
While Buffett and business partner Charlie Munger can’t predict how stocks will perform in 2009, they’re certain “that the economy will be in shambles throughout 2009 -- and, for that matter, probably well beyond,” he wrote.
Gross domestic product shrank at a 6.2 percent annual pace from October through December, the most since 1982, the Commerce Department said yesterday in Washington. Buffett said the consequences of the U.S. housing bubble are now “reverberating through every corner of our economy.”
Home purchases should involve an “honest-to-God down payment of at least 10 percent,” Buffett said. “Putting people into homes, though a desirable goal, shouldn’t be our country’s primary objective.”
Buffett endorsed efforts by the U.S. government to prevent the failure of financial firms including Bear Stearns Cos., which was sold to JPMorgan Chase & Co.
‘Immediate Action’
“Whatever the downsides may be, strong and immediate action by government was essential last year if the financial system was to avoid a total breakdown,” Buffett said. “Had that occurred, the consequences for every area of our economy would have been cataclysmic. Like it or not, the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat.”
Buffett’s letter accompanied the release of Berkshire’s fourth-quarter results, in which net income fell 96 percent to $117 million on losses from derivative bets tied to stock markets. Berkshire shares have fallen 44 percent in the past year as the value of the firm’s top stock holdings dropped and losses increased on the derivatives.
By the fourth quarter of last year, “the credit crisis, coupled with tumbling home and stock prices, had produced a paralyzing fear that engulfed the country,” Buffett said. “A freefall in business activity ensued, accelerating at a pace that I have never before witnessed. The U.S. - and much of the world - became trapped in a vicious negative-feedback cycle. Fear led to business contraction, and that in turn led to even greater fear.”
To contact the reporter on this story: Rick Levinson in New York at rlevinson2@bloomberg.net.
Buffett Says Economy Will Be ‘In Shambles’ for 2009
By Rick Levinson
Feb. 28 (Bloomberg) -- Billionaire Warren Buffett said the economy will be “in shambles” for the rest of this year as financial firms take losses tied to reckless loans made during the housing boom.
The Standard & Poor’s 500 Index will probably gain in three-quarters of the next 44 years, just as it did in the period since Buffett took over Berkshire Hathaway Inc. in 1965, he said today in his annual letter to the company’s shareholders.
While Buffett and business partner Charlie Munger can’t predict how stocks will perform in 2009, they’re certain “that the economy will be in shambles throughout 2009 -- and, for that matter, probably well beyond,” he wrote.
Gross domestic product shrank at a 6.2 percent annual pace from October through December, the most since 1982, the Commerce Department said yesterday in Washington. Buffett said the consequences of the U.S. housing bubble are now “reverberating through every corner of our economy.”
Home purchases should involve an “honest-to-God down payment of at least 10 percent,” Buffett said. “Putting people into homes, though a desirable goal, shouldn’t be our country’s primary objective.”
Buffett endorsed efforts by the U.S. government to prevent the failure of financial firms including Bear Stearns Cos., which was sold to JPMorgan Chase & Co.
‘Immediate Action’
“Whatever the downsides may be, strong and immediate action by government was essential last year if the financial system was to avoid a total breakdown,” Buffett said. “Had that occurred, the consequences for every area of our economy would have been cataclysmic. Like it or not, the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat.”
Buffett’s letter accompanied the release of Berkshire’s fourth-quarter results, in which net income fell 96 percent to $117 million on losses from derivative bets tied to stock markets. Berkshire shares have fallen 44 percent in the past year as the value of the firm’s top stock holdings dropped and losses increased on the derivatives.
By the fourth quarter of last year, “the credit crisis, coupled with tumbling home and stock prices, had produced a paralyzing fear that engulfed the country,” Buffett said. “A freefall in business activity ensued, accelerating at a pace that I have never before witnessed. The U.S. - and much of the world - became trapped in a vicious negative-feedback cycle. Fear led to business contraction, and that in turn led to even greater fear.”
To contact the reporter on this story: Rick Levinson in New York at rlevinson2@bloomberg.net.
Sunday, January 25, 2009
When a Rock Star CEO Leaves the Stage
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/17/AR2009011700356.html
When a Rock Star CEO Leaves the Stage
Sunday, January 18, 2009; Page F02
Frank Ahrens
Companies run by charismatic, high-profile chief executives are exciting to follow, but are they a good investment? Can too much of the company's value depend on one person?
An example to look at is Apple and its founder and rock star chief executive, Steve Jobs.
Jobs, a pancreatic-cancer survivor, has lost a great deal of weight and has appeared less frequently over the past year, stoking rumors of poor health.
Last week, Jobs said his health problems turned out to be "more complex" than previously revealed. He's taking a five-month leave of absence from Apple, turning over day-to-day operations to Chief Operating Officer Tim Cook.
Shares of Apple took a hit. Maybe no American chief executive is perceived as being more crucial to his company's future than Jobs is to Apple's.
Jobs co-founded Apple in 1976 but was ousted in a power struggle in 1985. Apple's results were mixed without him, and the company wandered strategically. In late 1997, Jobs returned. Apple's share price immediately began climbing as Jobs focused his company.
It soared when he introduced the revolutionary iPod and iTunes in 2001 and kept rising with the rollout of the innovative iPhone, hitting nearly $200 per share in December 2007, from about $3 in 1997, adjusted for splits and dividends. It has dropped by more than half since that peak, closing yesterday at $82.33 per share, clearly hurt by the recession. Its losses over the past half-year have been comparable in percentage to those at Dell and Microsoft, but analysts speculate that the stock would be trading higher were Jobs healthy and visible.
If you're an Apple shareholder, you're wondering how deep Apple's bench is.
If you're not, you may be looking around at other "cult of personality" companies with a wary eye.
Consider Rupert Murdoch's News Corp. -- a vast media and entertainment empire that includes movies, newspapers and satellite networks. All of which the 77-year-old Murdoch will turn over to his 36-year-old son James at some point.
World's Richest Man Warren E. Buffett is inextricably linked to his Berkshire Hathaway investment firm. The 78-year-old Buffett has said he has identified potential successors.
An example of a cult stock that has managed the exit of its leader while keeping a relative handle on investor value is Microsoft. Shares of the company's stock held fairly steady in the upper $20s throughout the beginning and middle of last year as founder and icon Bill Gates stepped aside to make way for the company's new chief executive, Steve Ballmer.
When a Rock Star CEO Leaves the Stage
Sunday, January 18, 2009; Page F02
Frank Ahrens
Companies run by charismatic, high-profile chief executives are exciting to follow, but are they a good investment? Can too much of the company's value depend on one person?
An example to look at is Apple and its founder and rock star chief executive, Steve Jobs.
Jobs, a pancreatic-cancer survivor, has lost a great deal of weight and has appeared less frequently over the past year, stoking rumors of poor health.
Last week, Jobs said his health problems turned out to be "more complex" than previously revealed. He's taking a five-month leave of absence from Apple, turning over day-to-day operations to Chief Operating Officer Tim Cook.
Shares of Apple took a hit. Maybe no American chief executive is perceived as being more crucial to his company's future than Jobs is to Apple's.
Jobs co-founded Apple in 1976 but was ousted in a power struggle in 1985. Apple's results were mixed without him, and the company wandered strategically. In late 1997, Jobs returned. Apple's share price immediately began climbing as Jobs focused his company.
It soared when he introduced the revolutionary iPod and iTunes in 2001 and kept rising with the rollout of the innovative iPhone, hitting nearly $200 per share in December 2007, from about $3 in 1997, adjusted for splits and dividends. It has dropped by more than half since that peak, closing yesterday at $82.33 per share, clearly hurt by the recession. Its losses over the past half-year have been comparable in percentage to those at Dell and Microsoft, but analysts speculate that the stock would be trading higher were Jobs healthy and visible.
If you're an Apple shareholder, you're wondering how deep Apple's bench is.
If you're not, you may be looking around at other "cult of personality" companies with a wary eye.
Consider Rupert Murdoch's News Corp. -- a vast media and entertainment empire that includes movies, newspapers and satellite networks. All of which the 77-year-old Murdoch will turn over to his 36-year-old son James at some point.
World's Richest Man Warren E. Buffett is inextricably linked to his Berkshire Hathaway investment firm. The 78-year-old Buffett has said he has identified potential successors.
An example of a cult stock that has managed the exit of its leader while keeping a relative handle on investor value is Microsoft. Shares of the company's stock held fairly steady in the upper $20s throughout the beginning and middle of last year as founder and icon Bill Gates stepped aside to make way for the company's new chief executive, Steve Ballmer.
Tuesday, March 11, 2008
The World's Richest People
http://www.forbes.com/home/billionaires/2008/03/05/buffett-worlds-richest-cx_mm_0229buffetrichest.html
The World's Richest People
Gates No Longer World's Richest Man
Matthew Miller
03.05.08
Warren Buffett is the richest man on the planet.
Riding the surging price of Berkshire Hathaway stock, America's most beloved investor has seen his fortune swell to an estimated $62 billion, up $10 billion from a year ago. That massive pile of scratch puts him ahead of Microsoft co-founder Bill Gates, who was the richest man in the world for 13 straight years.
Gates is now worth $58 billion and is ranked third in the world. He is up $2 billion from a year ago, but would have been perhaps as rich--or richer--than Buffett had Microsoft not made an unsolicited bid for Yahoo! at the beginning of February.
Microsoft shares fell 15% between Jan. 31, the day before the company announced its bid for the search engine giant, and Feb. 11, the day we locked in stock prices for the 2008 World's Billionaires list. More than half of Gates' fortune is held outside of Microsoft shares.
Mexican telecom tycoon Carlos Slim Helú is the world's second-richest man, with an estimated net worth of $60 billion. His fortune has risen $11 billion since last March.
Buffett, whose fortune is estimated based on his stake in Berkshire Hathaway and assets he holds outside the company, refused to comment on his net worth.
The race for the title of World's Richest Man has been extremely competitive in recent months. Class A shares of Berkshire Hathaway soared 25% between the middle of July and the day we priced our list. The stock hit an all-time high of $150,000 a share in December. At that time, Buffett was worth roughly $65 billion.
Berkshire Hathaway shares closed at $137,100 per share on Tuesday, down 2% since the announcement last Friday that the company's net earnings fell 18% in the fourth quarter of last year.
Gates' fortune also swelled massively last fall. Shares of Microsoft jumped 30% between late October and early November to $37 a share, only to fall after the company announced its intentions to buy Yahoo! for $45 billion on Feb. 1.
Slim's fortune has doubled in the past two years. Stock in his most significant holding, telecom outfit America Movil, has risen 120% since the beginning of 2006. Helú also owns stakes in Carso Global Telecom, Grupo Carso and Grupo Financiero Inbursa.
The son of a Nebraska politician, Buffett delivered newspapers as a boy. He filed his first tax return at age 13, claiming a $35 deduction for his bicycle. He moved on to study under value investing guru Benjamin Graham at Columbia University.
Buffett began buying shares in textile firm Berkshire Hathaway in 1962 and purchased a controlling stake in 1965. He began buying insurance companies and astutely investing those companies' cash reserves.
Today, Berkshire is invested in insurance (GEICO, General Re), jewelry (Borsheim's), utilities (MidAmerican Energy Holdings) and food (Dairy Queen, See's Candies). It also has noncontrolling stakes in Anheuser-Busch, Coca-Cola and Wells Fargo. Recently, the company disclosed it owns a significant stake in Kraft Foods.
In December, the company purchased a 60% stake in the Pritzker family's manufacturing and services group, Marmon Holdings, for $4.5 billion. The privately held Marmon owns businesses across wire and cable, transportation services and industrial products.
Despite Buffett's meteoric rise, his days as the World's Richest Man are almost certainly numbered. He had long promised to give away his fortune posthumously. But in the summer of 2006 he irrevocably earmarked the majority of his Berkshire shares to charity, most going to the Bill & Melinda Gates Foundation.
At the time, the gift was valued at $31 billion. However, assuming that Berkshire shares continue to rise, the final amount of the donation will far exceed that sum. Buffett gives 5% of his shares to charity every July.
In October, Buffett issued a challenge to members of the Forbes 400 richest Americans list, saying he would donate $1 million to charity if the collective group (or a significant number of them) would admit they pay less taxes, as a percentage of income, than their secretaries.
Days after issuing the challenge, Buffett appeared before Congress to encourage it to keep the estate tax. Armed with a few Forbes 400 issues, he told the hearing that "dynastic wealth, the enemy of a meritocracy, is on the rise."
The World's Richest People
Gates No Longer World's Richest Man
Matthew Miller
03.05.08
Warren Buffett is the richest man on the planet.
Riding the surging price of Berkshire Hathaway stock, America's most beloved investor has seen his fortune swell to an estimated $62 billion, up $10 billion from a year ago. That massive pile of scratch puts him ahead of Microsoft co-founder Bill Gates, who was the richest man in the world for 13 straight years.
Gates is now worth $58 billion and is ranked third in the world. He is up $2 billion from a year ago, but would have been perhaps as rich--or richer--than Buffett had Microsoft not made an unsolicited bid for Yahoo! at the beginning of February.
Microsoft shares fell 15% between Jan. 31, the day before the company announced its bid for the search engine giant, and Feb. 11, the day we locked in stock prices for the 2008 World's Billionaires list. More than half of Gates' fortune is held outside of Microsoft shares.
Mexican telecom tycoon Carlos Slim Helú is the world's second-richest man, with an estimated net worth of $60 billion. His fortune has risen $11 billion since last March.
Buffett, whose fortune is estimated based on his stake in Berkshire Hathaway and assets he holds outside the company, refused to comment on his net worth.
The race for the title of World's Richest Man has been extremely competitive in recent months. Class A shares of Berkshire Hathaway soared 25% between the middle of July and the day we priced our list. The stock hit an all-time high of $150,000 a share in December. At that time, Buffett was worth roughly $65 billion.
Berkshire Hathaway shares closed at $137,100 per share on Tuesday, down 2% since the announcement last Friday that the company's net earnings fell 18% in the fourth quarter of last year.
Gates' fortune also swelled massively last fall. Shares of Microsoft jumped 30% between late October and early November to $37 a share, only to fall after the company announced its intentions to buy Yahoo! for $45 billion on Feb. 1.
Slim's fortune has doubled in the past two years. Stock in his most significant holding, telecom outfit America Movil, has risen 120% since the beginning of 2006. Helú also owns stakes in Carso Global Telecom, Grupo Carso and Grupo Financiero Inbursa.
The son of a Nebraska politician, Buffett delivered newspapers as a boy. He filed his first tax return at age 13, claiming a $35 deduction for his bicycle. He moved on to study under value investing guru Benjamin Graham at Columbia University.
Buffett began buying shares in textile firm Berkshire Hathaway in 1962 and purchased a controlling stake in 1965. He began buying insurance companies and astutely investing those companies' cash reserves.
Today, Berkshire is invested in insurance (GEICO, General Re), jewelry (Borsheim's), utilities (MidAmerican Energy Holdings) and food (Dairy Queen, See's Candies). It also has noncontrolling stakes in Anheuser-Busch, Coca-Cola and Wells Fargo. Recently, the company disclosed it owns a significant stake in Kraft Foods.
In December, the company purchased a 60% stake in the Pritzker family's manufacturing and services group, Marmon Holdings, for $4.5 billion. The privately held Marmon owns businesses across wire and cable, transportation services and industrial products.
Despite Buffett's meteoric rise, his days as the World's Richest Man are almost certainly numbered. He had long promised to give away his fortune posthumously. But in the summer of 2006 he irrevocably earmarked the majority of his Berkshire shares to charity, most going to the Bill & Melinda Gates Foundation.
At the time, the gift was valued at $31 billion. However, assuming that Berkshire shares continue to rise, the final amount of the donation will far exceed that sum. Buffett gives 5% of his shares to charity every July.
In October, Buffett issued a challenge to members of the Forbes 400 richest Americans list, saying he would donate $1 million to charity if the collective group (or a significant number of them) would admit they pay less taxes, as a percentage of income, than their secretaries.
Days after issuing the challenge, Buffett appeared before Congress to encourage it to keep the estate tax. Armed with a few Forbes 400 issues, he told the hearing that "dynastic wealth, the enemy of a meritocracy, is on the rise."
Friday, February 15, 2008
Buffett offers to back municipal bonds
http://news.yahoo.com/s/ap/20080212/ap_on_bi_ge/buffett_muni_bonds
Buffett offers to back municipal bonds
By JOSH FUNK, AP Business Writer
2-12-08
Billionaire investor Warren Buffett said Tuesday that he has offered to help out troubled bond insurers by offering a second level of insurance on up to $800 billion in municipal bonds.
In an interview on CNBC, Buffett said his Berkshire Hathaway holding company made the offer of reinsurance to bond insurers Ambac Financial Group Inc., MBIA Inc. and Financial Guaranty Insurance Co. Buffett said one firm rejected his offer, and he was still waiting to hear from the other two. He did not say which was which.
Many have speculated Buffett could step in and help out the troubled industry, though he made clear his offer was not altruistic.
"When I go to St. Peter I will not present this as some act that will entitle me to get in," Buffett said on CNBC. "We're doing this to make money."
Berkshire spokeswoman Jackie Wilson said Buffett was traveling Tuesday, and no one was immediately available to comment.
Earlier this month, Buffett said Berkshire would not invest in any of the bond insurers, but his company would consider insuring some of the risks the bond insurers had assumed.
Bond insurers write policies that promise to cover payments to bondholders if the entity that issued the bonds defaults.
Buffett said on CNBC that he estimated that $800 billion of reinsurance would cover all of the tax exempt municipal bonds that Ambac, MBIA and Financial Guaranty insure.
Reinsurance policies offer coverage to insurance companies that want to completely or partly insure the risk they have assumed for their customers.
Buffett said Berkshire offered to reinsure the municipal bonds in exchange for a fee equal to 1.5 times the remaining unearned premium over the life of the bonds.
Buffett said on CNBC that such a deal would ensure that the bonds would sell at a fair price. Currently, he said, the bonds sell at significant discounts because of concerns about the financial health of the bond insurers.
In recent months, bond insurers have come under fire from ratings agencies, which are worried the insurers do not have enough spare cash to cover a potential spike in claims.
Bond insurers originally offered insurance mainly to municipalities but in recent years expanded their operations to insure more profitable but riskier instruments.
That riskier debt includes bonds backed by pools of mortgages — mainly subprime loans given to customers with poor credit history. As those mortgages have increasing defaulted, ratings agencies fear the bonds supported by the troubled loans will default as well.
A spike in defaults in the coming months could force the insurers to pay billions of dollars in claims.
Buffett said he's seen insured bonds selling at lower prices than uninsured bonds
"So the insurance in the market is presently not doing the bondholders a bit of good, and in fact in some cases it's even penalizing the price below that of other bonds," Buffett said on CNBC.
Late last year, Berkshire launched its own bond insurance business to take advantage of the credit problems other bond insurers have been having.
Berkshire's new bond insuring division has a "AAA" credit rating. Buffett has said Berkshire's new company already has done a couple of deals insuring municipal bonds.
Some bond insurers, such as Ambac and FGIC, have been downgraded by ratings agencies in the past month as they have been unable or chosen not to raise capital to ensure their vital "AAA" financial strength rating.
Bond insurers essentially need "AAA" ratings to book new business.
Buffett's reinsurance offer would only back municipal bonds, he said, and not other risky and complicated financial instruments.
Berkshire owns insurance, furniture, jewelry and candy companies, restaurants, natural gas and corporate jet firms and has major investments in such companies as The Coca-Cola Co. and Wells Fargo & Co.
___
AP Business Writer Stephen Bernard in New York contributed to this report.
___
On the Net:
Berkshire Hathaway Inc.: http://www.berkshirehathaway.com/
Transcript of CNBC interview: http://www.cnbc.com/id/23126179
Ambac Financial Group Inc.: http://www.ambac.com/
MBIA Inc.: http://www.mbia.com/
Financial Guaranty Insurance Co.: http://www.fgic.com/
Buffett offers to back municipal bonds
By JOSH FUNK, AP Business Writer
2-12-08
Billionaire investor Warren Buffett said Tuesday that he has offered to help out troubled bond insurers by offering a second level of insurance on up to $800 billion in municipal bonds.
In an interview on CNBC, Buffett said his Berkshire Hathaway holding company made the offer of reinsurance to bond insurers Ambac Financial Group Inc., MBIA Inc. and Financial Guaranty Insurance Co. Buffett said one firm rejected his offer, and he was still waiting to hear from the other two. He did not say which was which.
Many have speculated Buffett could step in and help out the troubled industry, though he made clear his offer was not altruistic.
"When I go to St. Peter I will not present this as some act that will entitle me to get in," Buffett said on CNBC. "We're doing this to make money."
Berkshire spokeswoman Jackie Wilson said Buffett was traveling Tuesday, and no one was immediately available to comment.
Earlier this month, Buffett said Berkshire would not invest in any of the bond insurers, but his company would consider insuring some of the risks the bond insurers had assumed.
Bond insurers write policies that promise to cover payments to bondholders if the entity that issued the bonds defaults.
Buffett said on CNBC that he estimated that $800 billion of reinsurance would cover all of the tax exempt municipal bonds that Ambac, MBIA and Financial Guaranty insure.
Reinsurance policies offer coverage to insurance companies that want to completely or partly insure the risk they have assumed for their customers.
Buffett said Berkshire offered to reinsure the municipal bonds in exchange for a fee equal to 1.5 times the remaining unearned premium over the life of the bonds.
Buffett said on CNBC that such a deal would ensure that the bonds would sell at a fair price. Currently, he said, the bonds sell at significant discounts because of concerns about the financial health of the bond insurers.
In recent months, bond insurers have come under fire from ratings agencies, which are worried the insurers do not have enough spare cash to cover a potential spike in claims.
Bond insurers originally offered insurance mainly to municipalities but in recent years expanded their operations to insure more profitable but riskier instruments.
That riskier debt includes bonds backed by pools of mortgages — mainly subprime loans given to customers with poor credit history. As those mortgages have increasing defaulted, ratings agencies fear the bonds supported by the troubled loans will default as well.
A spike in defaults in the coming months could force the insurers to pay billions of dollars in claims.
Buffett said he's seen insured bonds selling at lower prices than uninsured bonds
"So the insurance in the market is presently not doing the bondholders a bit of good, and in fact in some cases it's even penalizing the price below that of other bonds," Buffett said on CNBC.
Late last year, Berkshire launched its own bond insurance business to take advantage of the credit problems other bond insurers have been having.
Berkshire's new bond insuring division has a "AAA" credit rating. Buffett has said Berkshire's new company already has done a couple of deals insuring municipal bonds.
Some bond insurers, such as Ambac and FGIC, have been downgraded by ratings agencies in the past month as they have been unable or chosen not to raise capital to ensure their vital "AAA" financial strength rating.
Bond insurers essentially need "AAA" ratings to book new business.
Buffett's reinsurance offer would only back municipal bonds, he said, and not other risky and complicated financial instruments.
Berkshire owns insurance, furniture, jewelry and candy companies, restaurants, natural gas and corporate jet firms and has major investments in such companies as The Coca-Cola Co. and Wells Fargo & Co.
___
AP Business Writer Stephen Bernard in New York contributed to this report.
___
On the Net:
Berkshire Hathaway Inc.: http://www.berkshirehathaway.com/
Transcript of CNBC interview: http://www.cnbc.com/id/23126179
Ambac Financial Group Inc.: http://www.ambac.com/
MBIA Inc.: http://www.mbia.com/
Financial Guaranty Insurance Co.: http://www.fgic.com/
Friday, November 9, 2007
PetroChina's Value Tops $1 Trillion
http://www.bloomberg.com/apps/news?pid=20601087&sid=aQyRJI72Kor8&refer=worldwide
PetroChina's Value Tops $1 Trillion, Surpassing Exxon
By Ying Lou
Nov. 5 (Bloomberg) -- PetroChina Co. almost tripled on its first day of trading in Shanghai, becoming the world's first company to be valued at $1 trillion, more than Exxon Mobil Corp. and General Electric Co. combined.
PetroChina shares rose to 43.96 yuan from the sale price of 16.7 yuan, giving the state-owned oil producer a greater market value than the entire Russian stock market.
The rally makes PetroChina shares four times more expensive than those of Exxon, even though China's biggest oil producer has a quarter of the revenue. China's stock market was valued at less than $1.1 trillion before tripling this year and giving the communist nation four of the world's 10 biggest companies, even after today's 5 percent tumble in Hong Kong stocks.
PetroChina's valuation is ``an indication of China coming of age and also of its stock market bubble,'' said Hugh Young, who oversees $50 billion at Aberdeen Asset Management Asia Ltd. in Singapore.
The oil producer's Shanghai listing pushes China's stock market beyond the U.K. as the world's third-largest. PetroChina trades at 55 times earnings, four times Exxon's ratio of 13 times earnings and near the 58 times for Google Inc., the world's most-used Internet search engine.
In Hong Kong, PetroChina fell 8.2 percent to HK$18. Exxon shares rose 0.7 percent to $87.93, valuing the company at $488 billion on the New York Stock Exchange.
`Sense of Responsibility'
``I feel very excited today and also feel a very strong sense of responsibility,'' Chairman Jiang Jiemin said at the Shanghai Stock Exchange. ``This is PetroChina returning to our investors and society.''
Jiang struck a gong as the market opened at 9:30 a.m., then toasted the start of trading with a glass of red wine.
China's largest oil and gas producer had 20.5 billion barrels of oil and gas reserves in 2006, compared with 22.1 billion for Irving, Texas-based Exxon, data compiled by Bloomberg show. PetroChina has been adding new reserves at an average annual rate of 5 percent for the past three years, a faster pace than Exxon, Royal Dutch Shell Plc and BP Plc, the world's largest oil companies by sales.
The share sale, the world's biggest this year, surpassed the 66.6 billion yuan raised by China Shenhua Energy Co. in September. PetroChina raised 66.8 billion yuan selling 4 billion shares last week as investors applied for more than 3.3 trillion yuan of stock, almost 50 times the amount PetroChina sold.
Record Oil
Those investors were until now prevented from directly buying PetroChina stock, missing out on a 15-fold surge as economic growth turned the nation into the largest oil consumer after the U.S. and as crude prices reached a record $96.24 a barrel in New York.
The CSI 300 Index of shares listed on the Shanghai and Shenzhen exchanges has increased about 170 percent this year as mainland Chinese investors seek returns on $2.3 trillion of savings, raising investor concerns that the market is too expensive.
Billionaire investor Warren Buffett's Berkshire Hathaway Inc. sold its stake in PetroChina this year, reaping an eightfold gain that contributed to a 64 percent increase in third-quarter profit for the Omaha, Nebraska-based company. Berkshire had 2.34 billion shares as of the end of 2006, the largest holding after state-owned China National Petroleum Corp.
Buffett said on Oct. 24 that Chinese share prices have risen too fast.
`Carried Away'
``It's easy to be carried away in the stock market when things are going very well,'' he said in the northern Chinese city of Dalian. ``We at Berkshire never buy stocks when we see prices soaring.''
Gains in PetroChina's shares in Shanghai may have more to do with Chinese investors seeking better returns than the outlook for the company's exploration and production operations, or its refining business, known as downstream, said Larry Grace, an oil analyst at Kim Eng Securities Co. in Hong Kong.
``Production is static with limited upside for the next three to four years,'' Grace said. ``As for the downstream, the price controls and overall regulatory trend limit the company's earnings.''
China controls fuel prices to shield consumers in the world's most-populous nation from accelerating inflation. The policy limits the ability of PetroChina and China Petroleum & Chemical Corp. to pass on the burden of higher crude oil costs.
The other Chinese companies that rank among the world's 10 largest by market value are China Petroleum, known as Sinopec, China Mobile Ltd., Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp.
``A-share prices don't reflect global benchmarks of value,'' said Lorraine Tan, head of equity research at Standard & Poor's Investment Services in Singapore. ``There should be other measures of a company's position, including revenue and profitability. Market cap is not necessarily accurate.''
PetroChina's share surge means it beat by years a Russian pledge to create the world's largest company.
OAO Gazprom, Russia's natural gas export monopoly, would become the world's largest company by market value and top $1 trillion in ``seven to 10 years,'' Alexander Medvedev, the company's deputy chief executive officer, said in April. Gazprom's market valuation today is $296 billion.
To contact the reporter on this story: Ying Lou in Shanghai at ylou1@bloomberg.net .
PetroChina's Value Tops $1 Trillion, Surpassing Exxon
By Ying Lou
Nov. 5 (Bloomberg) -- PetroChina Co. almost tripled on its first day of trading in Shanghai, becoming the world's first company to be valued at $1 trillion, more than Exxon Mobil Corp. and General Electric Co. combined.
PetroChina shares rose to 43.96 yuan from the sale price of 16.7 yuan, giving the state-owned oil producer a greater market value than the entire Russian stock market.
The rally makes PetroChina shares four times more expensive than those of Exxon, even though China's biggest oil producer has a quarter of the revenue. China's stock market was valued at less than $1.1 trillion before tripling this year and giving the communist nation four of the world's 10 biggest companies, even after today's 5 percent tumble in Hong Kong stocks.
PetroChina's valuation is ``an indication of China coming of age and also of its stock market bubble,'' said Hugh Young, who oversees $50 billion at Aberdeen Asset Management Asia Ltd. in Singapore.
The oil producer's Shanghai listing pushes China's stock market beyond the U.K. as the world's third-largest. PetroChina trades at 55 times earnings, four times Exxon's ratio of 13 times earnings and near the 58 times for Google Inc., the world's most-used Internet search engine.
In Hong Kong, PetroChina fell 8.2 percent to HK$18. Exxon shares rose 0.7 percent to $87.93, valuing the company at $488 billion on the New York Stock Exchange.
`Sense of Responsibility'
``I feel very excited today and also feel a very strong sense of responsibility,'' Chairman Jiang Jiemin said at the Shanghai Stock Exchange. ``This is PetroChina returning to our investors and society.''
Jiang struck a gong as the market opened at 9:30 a.m., then toasted the start of trading with a glass of red wine.
China's largest oil and gas producer had 20.5 billion barrels of oil and gas reserves in 2006, compared with 22.1 billion for Irving, Texas-based Exxon, data compiled by Bloomberg show. PetroChina has been adding new reserves at an average annual rate of 5 percent for the past three years, a faster pace than Exxon, Royal Dutch Shell Plc and BP Plc, the world's largest oil companies by sales.
The share sale, the world's biggest this year, surpassed the 66.6 billion yuan raised by China Shenhua Energy Co. in September. PetroChina raised 66.8 billion yuan selling 4 billion shares last week as investors applied for more than 3.3 trillion yuan of stock, almost 50 times the amount PetroChina sold.
Record Oil
Those investors were until now prevented from directly buying PetroChina stock, missing out on a 15-fold surge as economic growth turned the nation into the largest oil consumer after the U.S. and as crude prices reached a record $96.24 a barrel in New York.
The CSI 300 Index of shares listed on the Shanghai and Shenzhen exchanges has increased about 170 percent this year as mainland Chinese investors seek returns on $2.3 trillion of savings, raising investor concerns that the market is too expensive.
Billionaire investor Warren Buffett's Berkshire Hathaway Inc. sold its stake in PetroChina this year, reaping an eightfold gain that contributed to a 64 percent increase in third-quarter profit for the Omaha, Nebraska-based company. Berkshire had 2.34 billion shares as of the end of 2006, the largest holding after state-owned China National Petroleum Corp.
Buffett said on Oct. 24 that Chinese share prices have risen too fast.
`Carried Away'
``It's easy to be carried away in the stock market when things are going very well,'' he said in the northern Chinese city of Dalian. ``We at Berkshire never buy stocks when we see prices soaring.''
Gains in PetroChina's shares in Shanghai may have more to do with Chinese investors seeking better returns than the outlook for the company's exploration and production operations, or its refining business, known as downstream, said Larry Grace, an oil analyst at Kim Eng Securities Co. in Hong Kong.
``Production is static with limited upside for the next three to four years,'' Grace said. ``As for the downstream, the price controls and overall regulatory trend limit the company's earnings.''
China controls fuel prices to shield consumers in the world's most-populous nation from accelerating inflation. The policy limits the ability of PetroChina and China Petroleum & Chemical Corp. to pass on the burden of higher crude oil costs.
The other Chinese companies that rank among the world's 10 largest by market value are China Petroleum, known as Sinopec, China Mobile Ltd., Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp.
``A-share prices don't reflect global benchmarks of value,'' said Lorraine Tan, head of equity research at Standard & Poor's Investment Services in Singapore. ``There should be other measures of a company's position, including revenue and profitability. Market cap is not necessarily accurate.''
PetroChina's share surge means it beat by years a Russian pledge to create the world's largest company.
OAO Gazprom, Russia's natural gas export monopoly, would become the world's largest company by market value and top $1 trillion in ``seven to 10 years,'' Alexander Medvedev, the company's deputy chief executive officer, said in April. Gazprom's market valuation today is $296 billion.
To contact the reporter on this story: Ying Lou in Shanghai at ylou1@bloomberg.net .
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