No, we don’t mean in the good way (who wouldn’t kill for flat performance over the past year?). We mean in the round-trip way.
As in: All those stock gains Warren had amassed over the years, including the moonrocket WaPo and Coke stakes, have now disappeared.
At the end of 2007, says hedge fund manager Jeff Matthews, Warren had an embedded gain in Berkshire’s stock portfolio of $35 billion. Now, he’s flat.
Based on the year-end portfolio presented in the letter (and it has changed only modestly over time, but now excludes two stocks, Burlington Northern and Moody’s, in which Berkshire owns 20% and must report its holdings under the equity method,) Berkshire’s entire equity portfolio, which had a $37 billion cost basis and a $49 billion market value at year-end 2008, was, as of yesterday’s market close, worth only about $37 billion…
Now, the calculation itself is fairly straightforward. Since year-end Berkshire’s equity portfolio has suffered losses of close to $1 billion or more in American Express, Conoco-Phillips, P&G, and USB, if the computers here at NotMakingThisUp are correct.
And while some of those losses are certainly temporary, the hits to his financial holdings look more permanent—as does the whopping $5 billion decline in Berkshire’s 7% stake in Wells Fargo thus far in 2009.
Virtually every other named holding in Berkshire’s portfolio—including Coke, Tesco, Swiss Re, and even poor old Washington Post—is also down year-to-date.
Consequently, if our maths is correct, Berkshire’s equity portfolio stands at roughly $37 billion as of yesterday’s market close, dead even with its $37.1 billion reported cost basis at year-end 2008.
And here’s another bombshell:
Buffett also disclosed what might go down as the second most surprising disclosure in today’s letter: he had to sell some of Berkshire’s stocks to make those headline-grabbing investments in GE, Goldman Sachs and Wrigley.
Read the whole post at Jeff Matthews Is Not Making This Up >