Problems with Goldman Sachs $GS, $BRK.B, $MS, $XLF, $AIG

Berkshire Hathaway is having their annual frenzy. Ponder the Bear Case Scenario for one of their key holdings Goldman Sachs.

Goldman Sachs is obviously Wall Street. They hop scotch their way through different products as they pay homage to the all mighty buck. Wall Street is cyclical. Goldman Sachs earnings will be cyclical. Cyclical is not a core value for deep value investing. Add to the mix regulatory risk that Goldman still faces from the Obama presidency and you do not have the deep value that should pay dividends forever. Goldman Sachs is a horse that gets used up. Berkshire should be buying the farms and ensuring value exists for generations.

George Gutowski writes from a caveat emptor perspective.

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Problems for Coca-Cola $KO, $PEP, $BRK.B

Berkshire Hathaway is having its annual frenzy. Ponder the Bear Case Scenario in this core Berkshire Hathaway Holding even while Warren Buffett thinks its un-American to vote against its management.

Coca-Colas revenues are not as diversified as Pepsi. In any portfolio exercise this is a bad thing. Warren Buffet should understand this point perfectly.

Coca-Cola revenues are 74% sparkling beverages which is slow to no growth. Overall growth is from other drinks products which should speak volumes as to where the growth really is. Cola growth is negative in the USA. Investment in bottling operations is capital-intensive and returns are not accretive to Coca-Cola.

George Gutowski writes from  a caveat emptor perspective

Problems for Moody’s $MCO, $BRK.B, $MHFI

Berkshire Hathaway is having its annual frenzy. Lets take a look at Moody’s which is a large holding and reputedly on the sell list for Berkshire.

Since the sub-prime mortgage crisis and the reputational hit that ratings companies took Warren Buffett has been a net seller.  The problem is he has been slow at it. The problems are being fixed and the reputations of ratings companies are being rehabilitated. What Warren did not like is being fixed so maybe he should have taken the classic value investor approach and buy ugly followed by sell pretty. Seems like he has it backward here. He did not max out his thinking on this position.

George Gutowski writes from a caveat emptor perspective.

Problems for USG $USG, $CODGF, $BRK.B, $HCMLY, $LFRGY, $CXMSF

Berkshire Hathaway is having their annual frenzy. Ponder the Bear Case Scenario for one of their key publicly traded holdings. USG.

USG is the leading wallboard and gypsum-related panels producer in the U.S. This means housing, real estate, interest rates, employment and consumer confidence. Warren what part of the sub-prime mortgage and housing crisis did you not understand. Housing is in a mild fragile recovery. This stock does not have any drivers which indicate superior share wealth creation will occur. Add in the fact that they are highly levered in a low-interest rate environment does not create more confidence.

I suspect he is anchored in olde school thinking where you bought large and dominant without much regard to the entire supply chain. the days of dry wall shortage are well behind us and not likely to re-appear soon.

George Gutowski writes from a caveat emptor perspective.

Problems for General Motors $GM, $F, $TM, $VLKPY, $DDAIY, $BRK.B #WARRENBUFFET

Berkshire Hathaway is having its annual frenzy. Consider some problems for General Motors which is a large component part of Berkshire Hathaway’s portfolio.

When it comes down to it I believe Warren Buffett has a behavioural bias and tends to anchor on Big American stocks. GM which is really just finished up the restructuring already is having massive recall issues. the olde school big auto arrogance is back. GM will most likely lose share to foreign more nimble manufacturers. No one has a firm grip on the US market. expect inroads from Hyundai and Volkswagen among others. Global vehicle demand is very uncertain and subject to risks which Warren Buffett is not used to seeing. Automotive stocks sell off when macro concerns boil over. at any given point in time the question will be why are we holding this one.

George Gutowski writes from a caveat emptor perspective.

Bear Case Scenario Berkshire Hathaway Warren Buffett $BRK.B, $AIG, $XLF, $AXAHY, $AZSEY

Ponder the Bear Case Scenario for Berkshire Hathaway (NYSE:BRK.B). Yes even Warren Buffett’s legendary investment vehicle has some potential Black Swan events which may hurt it. The main points are:

Insurance Operations are large-scale risk factories. Statistics says you cannot win every day. Large catastrophic events such as whether or geo-political can destroy the best risk manager and actuary. That includes Warren Buffett and Charlie Munger.

Berkshire Hathaway is so large it is hard to do new deals which are sizeable enough to impact overall operations. The classic value investment is to get in when it’s bad and dirty and sell when its pretty and lovely. More easily said than done. But at this point $100 million deals are too small to be of consequence.

Leadership. Both Warren Buffett and Charlie Munger are very very olde. They can go any minute and doctors would not be surprised. Or worse they can become cognitively or physically impaired and linger creating anxiety and confusion. While they seem to have many able lieutenants only Croesus matches the Brand Power and investors will be disappointed.

Most of Warren Buffett’s wealth will go to that wonderful charity that Bill Gates is running. Charities spend money to fund worthwhile causes. They have the same problem all charities have. More causes than money. There will be a huge danger to become a net seller and depress the stock value.

The charity will also be looking to diversify its investment for all the classic reasons touted by Warren Buffett. Again a net selling dynamic will come into play.

Watch for a large financially engineered scheme to reshape Berkshire Hathaway and satisfy the Gates Foundation needs for good investment governance.

George Gutowski writes from a caveat emptor perspective.

Warren Buffett’s Crazy Oil Logic Makes Him Bullish on Keystone XL $XOM, $BRKB, $SU, $BNI

Warren Buffett of Berkshire Hathaway (NYSE:BRK.B) is always bullish on America. He is buying big oil like Exxon (NYSE:XOM) because he sees value. Oil and hydro carbon consumption only comes with economic activity. He already is big on Suncor (NYSE:SU) and the Canadian Oil Sands.

Being a major railroad investor with Burlington Northern Sante Fe (NYSE:BNI) he knows all about commodities and oil shipments by rail cars. He therefore would have a view on the Keystone XL pipeline and its impact on oil, energy and the economy.

By accumulating this portfolio he must have concluded that the Keystone XL pipeline will come to fruition and benefit his positions.

Warren is a sly olde dog.

George Gutowski writes from a Caveat Emptor Perspective.