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Warren Buffett Calls Berkshire's 2012 'Subpar' and Transocean Restarts Dividend

U.S. markets will look to test new highs this week with the Dow 100 points away from an all-time closing high. With a Shiller P/E of 22.7, we are still overvalued considering the historical mean of 16.5. But one never knows where the market is headed and so, the search for value continues.

Warren Buffett is getting a lot of media attention after Berkshire’s Annual Report was released and called Berkshire’s performance “subpar.” Despite growing Berkshire Hathaway (BRK.A)(BRK.B)'s book value by 14% (or $24.1 billion), Buffett failed to make any major acquisitions and book value grew less than the S&P 500’s 16% gain. What the media and value investors sometimes forget is how big of a ship Buffett is steering. He faces the problem of cash coming in on a consistent basis and unless he is able to put the money to work, it will earn next to nothing. I wouldn’t be surprised if Berkshire’s streak of never having a five-year period of underperformance come to an end in the near future.

And if that wasn’t enough Warren for your brain, he had a long Q&A session with CNBC’s Beck Quick in which he answered questions on the economy, sequester, J.C. Penney (JCP), stocks, private equity, accounting, etc.


Shares of Transocean (RIG) are up in early trading after it posted fourth quarter EPS of $0.91 versus analyst estimates of $0.82/share as more of its fleet was working compared to one year ago. The Swiss-based offshore drilling contractor is also restarting dividend payments a month after activist investor Carl Icahn, who owns 5.6% of the company, made that recommendation to the board. For now it looks like the board will continue with the payout which will start at $2.24 per share on an annual basis and will be paid out quarterly.

It has been a mixed bag between Gurus and Transocean with several Gurus reducing or selling out in the last quarter. These Gurus include:

The two Gurus who are bullish include:

  • Carl Icahn, 10.2% impact to his portfolio, and the one who convinced the board to restart the dividend.
  • David Tepper, Appaloosa Management, (New Buy, 1.5%) impact to the portfolio.
Disclaimer: None

About the author:

I'm in love with value investing and in particular Joel Greenblatt's "magic formula". I run a well diversified portfolio

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