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Sally Jones
Sally Jones
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Berkshire Hathaway - Making Money on Moody’s

May 10, 2013 | About:
Warren Buffett told CNBC, “We’re selling Moody’s at six times what we paid.”

According to the GuruFocus Real Time Picks, Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) reduced its position with Moody's Corporation (NYSE:MCO) again by 1.47% as of May 9, 2013. Trading at the average price of $64.06, Berkshire unloaded 371,361 shares. The current share price is $64.17 with a change from average up 1%. Berkshire holds 24,922,178 shares after the trade.

This trade follows Berkshire’s previous reductions of MCO in the last 10 days, on May 1, for 6.15%, and again on May 6 for 5.16%. Longtime shareholder of Moody’s, Berkshire Hathaway remains the largest shareholder of MCO, with a stake of about 24.9 million shares, around 11.15% of the company. Berkshire has consistently made money selling off MCO shares since third quarter of 2009; its highest gain was 184.3% in the third quarter of 2013, and the trading history shows five quarters of triple-digit gains.

Trading history:

Read the first MCO story here.

Up 5% since Berkshire’s last reduction and up 70% for 12 months, Moody's Corporation has a market cap of $14.46 billion, and a P/E of 21.10 and a P/S of 5.16. Moody’s Corporation is the parent company of Moody's Investors Service, a research and credit rating agency, and Moody's Analytics, a credit, economic analysis and financial risk management firm. The corporation reported revenue of $2.7 billion in 2012, employs approximately 6,800 people worldwide and maintains a presence in 28 countries.

Last week Moody's Corporation reported revenue of $731.8 million for the first quarter of 2013, up 13% from $646.8 million for the first quarter of 2012. Operating expenses for the first quarter of 2013, which include a litigation settlement charge, totaled $451.4 million, 19% higher than in the prior-year period. The company’s operating income for the quarter was $280.4 million, a 4% increase from $269 million for the same period last year. Moody’s diluted earnings per share of $0.83, which includes a litigation settlement charge of $0.14, increased 9% from $0.76 in the first quarter of 2012

Moody’s President and CEO Raymond McDaniel commented: "Moody's results in the first quarter of 2013 reflected strong operating performance for both Moody's Investors Service and Moody's Analytics… Earnings per share growth of 9% for the quarter reflects higher than anticipated expenses associated with our resolution of two protracted litigation matters. Our full-year 2013 non-GAAP EPS guidance range, which excludes the impact of those litigation settlements, is now $3.49 to $3.59."

Moody's full-year 2013 non-GAAP EPS guidance range, which excludes the impact of the first quarter litigation settlement charge, is now $3.49 to $3.59. For Moody's overall, the company still expects full-year 2013 revenue to grow in the high single-digit percent range, according to a company press release.

Moody’s Corporation share price over 10 years:

1368213133071.pngMCO data by

Warren Buffett is arguably the most respected investor in history with a $53.5 billion net worth as of March 2013. Buffett has been called "The Oracle of Omaha" for his investing prescience. In a recent update from GuruFocus, the Berkshire Hathaway portfolio lists 41 stocks, three of them new, and a total value of $75.3 billion with a quarter-over-quarter turnover of 4%.

Here is the complete portfolio of Warren Buffett.

More valuable information on Warren Buffett:

1. Warren Buffett's Undervalued Stocks

2. Warren Buffett's Top Growth Companies

3. Warren Buffett's High Yield stocks

4. Stocks that Warren Buffett keeps buying

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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

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