Tags: Warren | Buffett | NetJets

The One Buffett Pick Yet to Take Off

By    |   Monday, 07 Dec 2009 09:04 AM

Warren Buffett may be the world’s second richest man, but that doesn’t mean all his holdings turn to gold.

The investment legend is struggling with his 1998 purchase of private jet service NetJets.

Berkshire Hathaway, Buffett’s holding company, doesn’t provide complete information about the company, which provides private planes to people on a time-share basis.

But inside sources tell The New York Times that Berkshire has yet to recoup its $725 million investment in NetJets.

The recession has hit NetJets hard, as luxury travel sags. The company lost $531 million in the first nine months of this year, and revenue plunged 42 percent from a year earlier.

NetJets has experienced periods of profitability, including pretax profits of more than $550 between 2006 and 2008. But its overall record is inconsistent, an inside source told The Times.

“I call it the Scooby-Doo profitability rationale,” Robert Aboulafia, an aviation consultant with the Teal Group, told the paper. “They were always close to achieving profitability, but there was always one thing that stood in the way, and it was usually related to expansion.”

But Buffett may not have completely lost his touch.

Berkshire recently agreed to buy Burlington Northern Santa Fe, the country’s second largest railroad, for $34 billion.

Many experts were optimistic about the deal.

"(Buffett is) buying at the trough; things aren't going to get much worse. He's getting in at a good time," Art Hatfield, an analyst at Morgan Keegan, told the Associated Press.

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Warren Buffett may be the world’s second richest man, but that doesn’t mean all his holdings turn to gold.The investment legend is struggling with his 1998 purchase of private jet service NetJets. Berkshire Hathaway, Buffett’s holding company, doesn’t provide complete...
Warren,Buffett,NetJets
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2009-04-07
Monday, 07 Dec 2009 09:04 AM
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