THE BILLIONAIRE stockpicker Warren Buffett has been stripped of his business empire’s top-notch credit rating after a series of self-confessed “dumb” decisions contributed to his worst year in four decades.
The rating agency Moody’s downgraded Buffett’s Berkshire Hathaway investment company by two notches from triple-A to AA2. The setback is a blow to the prestige of the world’s second richest man, who commands a vast following among private investors across the US.
Moody’s said the capital cushion of Berkshire’s core insurance operations had been eroded by 22 per cent as its stock holdings lost value.
Elsewhere in Mr Buffett’s sprawling portfolio, businesses tied to construction, retailing and consumer finance suffered a squeeze in the recession.
Moody’s analyst Bruce Ballentine said the downgrade reflected “the impact on Berkshire’s key businesses of the severe decline in equity markets over the past year as well as the protracted recession”.
Usually a consistent performer, Berkshire saw its book value drop by 9.6 per cent a share in 2008, its worst performance since Mr Buffett took the reins in 1965.
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