Friday, August 14, 2009

Berkshire swimming

(Maybe its' because I haven't had enough coffee yet but ... isn't there a glaring contradiction below in bold? -AM)

By Andrew Frye and Jamie McGee
Aug. 13 (Bloomberg)

The market value of stocks in Berkshire’s portfolio dropped 35 percent in the 12 months ended Dec. 31 to $49.1 billion. Declines in the prices of securities are classified as unrealized if the company that owns them accounts for the values under the assumption the holdings will recover over time.

These losses, which aren’t subtracted from net income, widened more than fivefold to $5.8 billion as of the end of last year. In the same 12-month period, unrealized gains dropped by more than half to $14.8 billion.

Berkshire told the SEC that it wrote down stocks, counting the declines against net income, when “there was considerable uncertainty in the business prospects” of companies. Berkshire didn’t write down equities when “in management’s judgment the future earnings potential and underlying business economics of these companies were favorable,” Hamburg said in a May 22 letter to the SEC.

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