Word: buffett
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...Much of Buffett's letter, to be released on his firm's website (berkshirehathaway. com), will expound on corporate reforms needed in the wake of scandals at the likes of Enron, Tyco and WorldCom. He will probably urge that boards hire independent directors who will ask tough questions and curb excessive executive pay. He will call on CEOs to focus more on the long term and provide investors with clear, complete and timely information...
...Buffett will touch on what has long made his letter popular: how he is deploying Berkshire's $75 billion investment portfolio. He's less interested than he used to be in common stocks; he apparently finds their prices too high. Instead he's dabbling in junk bonds and acquiring private assets that range from apparel makers to gas pipelines. Buffett's book is no longer the model it once was: the investments he favors these days--specially constructed bonds and convertible preferred stock and private companies--aren't available to most investors. But they offer a clue...
Most investors will appreciate Buffett's generalship of the battle for stronger measures to restore corner-office accountability and stock-market confidence. His penchant for keeping things simple is legendary, and the need for reform remains acute. Just last week two former executives at Kmart were charged with manipulating earnings (their lawyer says the prosecution is "wrong and unjust"), while Dutch retailer Ahold owned up to faulty bookkeeping at a U.S. subsidiary and restated the past two years' earnings, slashing them $500 million...
...last time Buffett took on "corporate governance" was in his 1993 report, in which he focused on the need for companies to hire outside directors for their business savvy, not "because they are prominent or add diversity," and asserted that directors must have the spine to root out unethical behavior and take their concerns directly to shareholders--or resign, if entrenched directors balk...
...biggest impact, though, has come fairly recently. A good example is Wall Street earnings guidance, the issue on which Coke just got real. Some 95% of public companies still provide guidance. But in part because of Buffett's stand, the trickle of dissenters is growing. A cynic might note that this trickle consists mainly of companies that have struggled in recent years. Mickey D's, Ma Bell and Coke may simply be taking Mother's advice: If you can't say something nice, say nothing at all. But others are sure to fall in line. Buffett has long asserted that...