For those who haven't read the Barron's article, they essentially claimed that Berkshire was 10% overvalued. In a seemingly unrelated coincidence, Berkshire has given back a bit over 10% from its all-time high.
I don't want to get into Barron's quality of Berkshire's valuation on this thread, although with our asset allocation I wouldn't buy more. But among all the crap being flung by all sides over the Barron's article, I noticed this small tidbit:
Berkshire Hathaway's outlook raised to stable, IDR affirmed at 'AAA' - Fitch
After over 2½ years, Fitch's has raised its outlook on Berkshire from "negative" to "stable". They originally dropped the outlook to negative on their assessment of Berkshire's key-man risk and the AIG insurance scandal, yet somehow they've decided that it's no longer a problem. Presumably even Fitch's has noticed that Buffett isn't getting any younger, yet today they think his lifespan is more likely to exceed their 12-24 month outlook than they felt about it a couple years ago. The AIG case is just going to trial next month but somehow Fitch's has already decided the verdict.
What impact does Fitch's have? Anyone here have enough experience with ratings agencies to tell me the significance of this change of heart? (Even I think that nothing has really changed except Fitch's opinion.) Is there a concrete event that caused this shift, or is Fitch's just getting tired of taking a contrarian position? Are institutions required to pay any attention to this? If a ratings agency makes an apparently minor change like this, does it somehow give institutions their necessary permissions to start buying Berkshire shares again?
I don't want to get into Barron's quality of Berkshire's valuation on this thread, although with our asset allocation I wouldn't buy more. But among all the crap being flung by all sides over the Barron's article, I noticed this small tidbit:
Berkshire Hathaway's outlook raised to stable, IDR affirmed at 'AAA' - Fitch
After over 2½ years, Fitch's has raised its outlook on Berkshire from "negative" to "stable". They originally dropped the outlook to negative on their assessment of Berkshire's key-man risk and the AIG insurance scandal, yet somehow they've decided that it's no longer a problem. Presumably even Fitch's has noticed that Buffett isn't getting any younger, yet today they think his lifespan is more likely to exceed their 12-24 month outlook than they felt about it a couple years ago. The AIG case is just going to trial next month but somehow Fitch's has already decided the verdict.
What impact does Fitch's have? Anyone here have enough experience with ratings agencies to tell me the significance of this change of heart? (Even I think that nothing has really changed except Fitch's opinion.) Is there a concrete event that caused this shift, or is Fitch's just getting tired of taking a contrarian position? Are institutions required to pay any attention to this? If a ratings agency makes an apparently minor change like this, does it somehow give institutions their necessary permissions to start buying Berkshire shares again?