Although Warren Buffett’s personal conglomerate Berkshire Hathaway has eschewed paying dividends since the “bathroom dividend” of 1967, the Omaha legend’s personal management style tends to seek out recurring and growing streams of income as surely as Captain Ahab sought to stick a spear in Moby Dick. Today, the investor community learned that Berkshire Hathaway chose to convert its DirecTV holdings into 59 million shares of AT&T stock rather than cash out. This move will have AT&T pumping out $275,000 in cash dividends per day on behalf of Berkshire for an annual total of $100 million.
There are five points worth considering in response to this move:
Point #1: The seeds of this move were likely planted by Weschler or Combs, but the decision to harvest AT&T stock after this merger is a reflection of Buffett’s desire to give Berkshire some utility-like components. Berkshire owns Burlington Northern Santa Fe. It owns … Read the rest of this article!
Those whose ears now respond only faintly to the suggestion that IBM stock continues to be unusually cheap are understandably soured on a company whose four-year performance of losing 3% annually coincides with a period of 13.5% annual gains in the S&P 500.
The financial media have been persistent in coming at IBM shareholders from every direction to narrate the Armonk firm’s woes–declining hardware sales, twelve consecutive quarters of shrinking revenues, earnings per share declines, a tumbling stock price, late entry into cloud technology, sluggish demand from the BRIC countries, and currency headwinds. Some have
regarded IBM’s performance as a thorn in the halo of Warren Buffett’s half-a-century track record due to the 28% decline in the price of IBM stock since Buffett began Berkshire’s accumulation of it.
Nodding to Mark Twain, however, there is reason to believe that the death of IBM has been greatly exaggerated. The analytics division … Read the rest of this article!