Corporate Debt

How much does Buffett’s successor matter?

4 May 2009

The Sage of Omaha says the undisclosed candidates to succeed him as Berkshire Hathaway s investing supremo didn t do too well in 2008. That s perhaps forgivable. But their skill may not be the only key to Berkshire s future. The company s insurance bosses may be as important.

The changing world of Warren Buffett

30 Apr 2009

As Berkshire Hathaway shareholders gather for this year s Woodstock for capitalists , the legendary investor wants them to ask more about the company s business than usual. They should do that and listen up. Through Buffett s choices and market forces, Berkshire is changing.

GE becomes bellwether for global stimulus

17 Apr 2009

Its first quarter beat expectations. Even the financial side made money. But that briefly sexy business now looks like a drag. GE's onceboring industrial businesses seem set to benefit from an eventual economic upturn and, shorterterm, from worldwide government spending.

GE downgrade guts rationale for finance unit

12 Mar 2009

It just lost its tripleA rating, a big reason for keeping its industrial and finance arms together. This shouldn t affect its financing cost markets have ignored the rating for some time. And its customers should still be able to get financing from GE Capital after a split.

Geithner should communicate like Buffett

2 Mar 2009

The US Treasury secretary needs to be held accountable by taxpayers for using their money to subsidise AIG, Citi and the rest. Fielding questions on conference calls would seem an impossible logistical task. However, the Sage of Omaha may have a way forward.

GE’s Immelt should ask the Drucker question

27 Feb 2009

In 1981 the management guru challenged then GE boss Jack Welch to ask: If you weren't already in a business, would you enter it today? Apply that now to GE Capital and the answer would be no. Current CEO Jeff Immelt should prepare shareholders for a divorce from finance.

Are Berkshire Hathaway shares oversold?

27 Feb 2009

They lost more than 30% in 2008 and more since. Yet even in Buffett's worst year ever, the company's portfolio fell a notsobad 10%. The Sage of Omaha doesn't focus on the share price. But he says risks are now being overstated. As that corrects, the shares could benefit.

Harley fills up the tank with pricey Buffett fuel

3 Feb 2009

The billionaire has added the motorcycle maker to Berkshire s shelf of iconic American brands. He s buying half of Harley s $600m unsecured debt offering. But rather than Buffett handing over a trophy price, Harley is paying the premium for his vote of confidence.

Shareholders are getting GE Capital for free

23 Jan 2009

The finance arm has dragged down the industrial conglomerate's stock so precipitously that the market values this asset with $53bn of shareholders equity at zero. Chief Jeff Immelt should get cracking on a separation of the core business from GE Capital.

GE Capital imagines a bleak economic outlook

2 Dec 2008

That is why the industrial giant s financing division is scaling down its balance sheet significantly, and revamping its funding model. If its assumptions are correct 9% unemployment, two airline liquidations, and crummy debt markets then further shrinkage may be required.

Is Paulson the new Buffett?

20 Nov 2008

Not Hank, the US Treasury boss, but John of hedge fund fame. He has been around for 15 years, but has most famously made big money so far through the current financial crisis. Meanwhile shares in Buffett s Berkshire Hathaway are tumbling. But it s risky to write the old guy off.

Buffett shows way in managing mark-to-market

10 Nov 2008

The Omaha investor has written hefty derivatives on stocks and debt. With markets in a mess, he s taking paper losses. But his investment group has a huge financial cushion. That and Buffett s management of investor expectations offer lessons for other marktomarket sufferers.

GE’s Pollyanna ratings fail to convince

28 Oct 2008

The conglomerate enjoys tripleA ratings but markets don t seem to care. Its debt trades at low investment grade levels and its credit default swaps are in junk territory. That s partly due to technical factors. But it also shows how irrelevant ratings have become.

GE Capital’s shrink-back only first step

25 Sep 2008

The conglomerate slashed its earnings forecast by up to $3.5bn this year because of the finance unit s woes. GE is halting buybacks and will bolster the division s capital and reduce leverage. These are the right steps, but should be the prelude to a divorce.

GE should separate financial from industrial

18 Sep 2008

The SEC s addition of GE shares to its list of banned shorts highlights the conglomerate s neitherfishnorfowl status. The risk is that GE s industrial units could be held hostage to the financing needs of GE Capital. Why not spin off the finance arm as a bank holding company?

Nestlé’s loss looks to be Unilever’s gain

4 Sep 2008

Paul Polman missed out on the top job at Nestlé. Now he will be the first outsider to run Unilever. He needs to get the internal candidates he pipped to the post onside. But experience at Nestlé and P&G should help him give his new employer some much needed zip.

GE steps on slippery slope with consumer unit spin-off

10 Jul 2008

Handing off the lowgrowth microwave and lightbulb business makes sense. But so too would spinoffs of the media, consumer finance and other assets. Now that the market no longer accords GE any sort of diversity premium, anything s possible, including a breakup.

No free lunch in Peak Buffett theory

30 Jun 2008

Few things have compounded faster than the price of lunch with Warren Buffett. The winning bid in the charitable auction has risen at a 66% annual rate since 2000. The credit crunch has yet again shown the Omaha sage s investing acumen. His time is also a dwindling resource.

P&G gins up stock price without caffeine

4 Jun 2008

The consumer goods giant is selling its Folgers coffee brand to JM Smucker for $3.3bn. The anticipated sale may sound like a yawn. But the deal s taxefficient structure encouraged investors to add some $3bn of value to P&G s market cap.

AIG’s mis-steps should put CEO in hot seat

22 May 2008

Martin Sullivan has presided over damage including huge shock losses and a big accounting misstep. Some blame his imperious predecessor, Hank Greenberg. But if Chuck Prince had to quit despite Sandy Weill s troubled legacy at Citigroup, should Sullivan get off the hook?