Is Buffett losing his Triple A status again?

Triple A is short for an AAA rating, this is a rating that is made by agencies like Moody’s, Standard&Poors and Fitch.

According to Standard&Poor’s the acquisition of Burlington Northern Santa Fe is lowering Berkshire’s liquidity position and therefore the risks of investing in Berkshire would become higher.

However, this doesn’t have to mean this is a bad bet. As I stated in my last post I think it even is a great and genius bet. The reputation of the agencies are severely damaged by the credit crunch: some of the agencies (including the bigger ones mentioned above) used models to predict the US housing market in which the housing price could not decline.

When the housing prices suddenly started to decline they had to change their models and some products (primarily repacked CDO’s) were rated from the best possible rating AAA to the worst CCC in one day.

Berkshire’s Triple-A status was already taken by Moody’s and Fitch earlier this year based on losses in the derivates market. According to Buffett himself the loss of the top-rating would have no economic impact on Berkshire. He said he might just lose a bit of his pride…