Buffett cuts Moody’s stake after downgrade

Hole in the net: Warren Buffett, considered the canniest investor in the world, is becoming susceptible to the global recession

11 April 2012

Warren Buffett has slashed his stake in Moody's, just three months after the credit rating agency stripped the billionaire's Berkshire Hathaway group of its pristine AAA rating.

Berkshire cut its stake from just over 20% to 17% by offloading eight million of its 48 million Moody's shares for an average price of $27.25.

The proceeds of $218 million (£132 million) represented a decent return for Buffett, who paid $499 million for the 20.4% stake.Moody's shares dived 11% to $23.70. It was the first time Buffett has reduced his stake in the firm since 2000.

He has long defended his investment in Moody's despite the fact that ratings agencies are responsible for monitoring businesses in which he has an interest.

The Obama administration this week proposed new disclosure and conflict of interest rules for ratings agencies, which have seen their reputation battered by their failure to spot toxic assets in the build-up to the credit crunch.