Buffett NRG Energy average cost

From gurufocus, we can see investor gurus like Buffett’s buy and sell actions, usually 45 after the close of a quarter. NRG Energy is an interesting one, because it’s going to build the first nuclear power plant in the US for 30 years, and the offer Exelon put up last Oct. (0.485 share of Exelon for each share of NRG). More interestingly, Buffett’s Berkshire started buying NRG since last year. Here is the transactions: http://www.gurufocus.com/StockBuy.php?action=buy&GuruName=Warren+Buffett

2Q 08: $42.40 * 3,280,100 = 139,076,240
3Q 08: $35.50 * (5,000,000 – 3,280,100) = 61,056,450
4Q 08: $21.50 * 2,200,000 = 47,300,000

By my calculation average cost Buffett paid for NRG is 247,432,690/7,200,000 = $34.3657

Buying a stock Buffett was buying gives one some comfort because Buffett usually did his homework, and adhere to his rules (business; moat; management; price etc). Buying a stock at discount of the price Buffett paid offers some margin of safety. BTW, NRG closed at $18.33 today, about 50% of the Buffett price 🙂

Downside
The main downside of NRG is more than 50% of shareholders already accepted the tend offer from Exelon (they surrendered). Exelon extends tend offer till June 26. So hold on the stocks, just like the Oralce of Omaha does.

Questions for Warren in this year annual shareholder meeting

Also collected here.

1. Why invest in Utilities? Does not Utilities need a lot of capital, what’s the difference between Utilities and the original Berkshire (BRK.A, BRK.B) textile business? You did explained in your letter that utilities can deploy capital for a decent return. And I read this old article “Why Buffett is buying utilities” from MSN money (Jim Jubak). Do you agree some of what Jim said?

2. Why keep American Express (NYSE:AXP) and Moody (NYSE:MCO)? Don’t we see the permanent demage of consumer credit, and the rating companies? How about Wells Fargo (NYSE: WFC)? Why not sell all Bank of America (NYSE: BAC) shares (noticed you did sell half last year)?

3. Derivatives. There are a lot crititics on this, and you have explain this very well in the shareholder letter. But, as I read “Poor Chariles Almanack”, Charile is much more cautious on derivatives, and its systemantic risk (chain effect of credit risk form counter parties). What’s your comments on over the counter derivatives market in general?

Will add more questions when it pops up.

Disclosure: I sold my remaining BRK.B share yesterday. No positions on the other stocks being mentioned.

Buffett on CNBC

The Squawk box, here are the videos.

Part 1:

Berkshire Buffett COP Conoco Phillips stake

(Update Feb 29 2009) CNBC is putting up some nice words on Buffett today. After all, he lent $3 b to GE (the parent co. of NBC) last fall.

(Original) In these turbulant days, investors, ordinary and professional alike, look for directions from investor guru more than ever. Of course among gurus people pay attention, is Warren Buffett quarterly stock holdings change: people are interested in what he bought and what he sold, some (like yours truely) tried to understand his move and thinking, and follow him if makes sense. To avoid copycats, Buffett usually tries to delay his 13G filings as late as possible (within the deadline of SEC, or other regulatories). He famous sent a regular mail to Hongkong Securities Exchange after he sold the PetroChina stock, postmarked by the deadline of HSE.

Buffett on NBR (PBS)

Berkshire Hathaway (NYSE: BRK.A; BRK.B) has not done well lately. Nonetheless, Nightly Business Report (PBS) interviewed Buffett. The topic ranges from new administration, recession and investing. The interview is about 30 minutes long.

Interestingly Susie Gharib tried to ask particular investment advice, Buffett declined politely.

Jim Rogers

I read the Hot Commodities book by Jim Rogers in the trip. I have read the book a few years back when I was much novice to the investing, and I understand Jim is very outspoken and he is very bullish on China. But I did not find his book as exciting as I read it the first time. As matter of fact, as he wrote his book in 2004, some of his prediction broke down already:

1) The natural gas in the US. Due to the huge find in Haynesville and other un-conventional places, the NG price has fell to 5 years low.

2) One of his thesis for commodity bull is Americans want to live in McMansion and drive SUV. Well, the housing bust and the $4 gas have put a huge dent on this American dream.

3) China’s incrediable growth in last 30 years. It appears to me this is going to slow down, at least by a bit. China can not grow like that for forever; and Chinese can not expect to live like Americans with big houses and big SUVs due to limited land and other resources.

Other interesting points
I read some other interesting points, such as the stock market and commodity market has a negative co-relation (they go in opposite direction), and the cycle of the two markets in last 100 years. Jim put up some economic reasoning (mostly commodity cycle) but not as compelling as Buffett’s 10Dec2001 Fortune magazine article. In that article Buffett argued the interest rate and inflation are two key factors determining the return on equity. Also I think Jim painted a too-gloomy picture of the future of the US.

PS, personally I don’t think Jim Rogers is a Grand Master in the investment world. But I could not find another category for this post, plus he is famous in China. So…I put him here for now.

Peter is the guy

Peter Schiff (wiki) is the manager of Euro Pacific Capital. He seems correctly called the recession. But don’t just follow his advice and buy gold (ETF: GLD).

Yahoo Tech-ticker: Is this a stock picker’s market?

Former Miss HK talks about market, money & happiness

The thing I like her talk is not only she properly called the market when HSI was at 31,000; but her attitude on money and happiness. She talked in Cantonese, which is foreign to me, but it has English caption 🙂

Credit goes to trader1688. Don’t go there for trading advice though.

Buffett lost his touch?

Berkshire Hathaway, a.k.a, Warren Buffett’s diversified holding company, reported a not-so-good quarter Friday after market close. Here are the results.

(full size pic here)

On the surface the result is not good. But I think the loss from derivatives is on the paper and will be temporary.

What do we learn from Buffett
Discipline, discipline, discipline (see the definition at Wesbster Dictionary). There is a new book about Buffett came out lately. Here is the link to Amazon. If you like, you can also help me out buying from my Amazon store. But this is not my point. My point is, among many attributes that contribute to the success of Oracle of Omaha, discicpline is probablly the most important.

Jason Zweig wrote an article about the secret behind Buffett’s success on WSJ. Here is the Chinese translation.

Buffett pretender award

Buffett on the market

New York Times Op-ed piece (10/17/08): Buy American. I Am.

Buffett article Fortune Magazine 11/10/2001: Warren Buffett on the Stock Market: What’s in the future for investors

You can read more Buffett and Munger stuff at Warren & Charlie page.