On the SEC’s letters to Warren Buffett…

August 17, 2009

Although the SEC began releasing comment letters back in 2005, it hasn’t exactly been a smooth process. Due to the vagaries of EDGAR, finding these letters can be very tricky and with the help of the SEC Data Guy we’ve been experimenting with ways to make these letters easier to find since we believe there’s a lot of juicy nuggets in these letters.

Take, for example, the letters to Berkshire Hathaway (BRK.A) that were made public on Friday, even though the first letter was sent on April 20. Of the five letters, the May 22 letter which asked questions about the 2008 10-K is the most interesting. Just to be clear: the letter isn’t actually addressed to Warren Buffett or sent by Mary Schapiro, but instead is between CFO Marc Hamburg and Accounting Branch Chief Carlton Tartar.

While we don’t hold ourselves out to be a student of Buffett like our friend, Jeff Matthews, we think the letter provides some important additional details about the 10-K that Berkshire filed back in March. For example, there’s more details on the $1.8 billion “other than temporary impairment” that the company took last year. In the letter, Berkshire says that they had invested in 12 companies and that “unrealized losses in these securities generally ranged from 40% to 90% of cost”. Ouch. The good news here for ordinary investors, is that even the vaunted Berkshire makes some bad mistakes from time to time.

If you have interest in learning more about the comment letter database that we’re working on with the SEC Data Guy, drop us a note here.

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