Warren Buffett seems to think less and less of the credit-rating business. His company, Berkshire Hathaway (BRK.A), sold more shares of Moody's (MCO) on Dec. 22. An SEC filing showed the sale of 87,992 shares a few days earlier. Bloomberg reports that this is the sixth sales since Buffett bought a big piece of Moody's in July.%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%%Is it any wonder that Buffett wants out? Moody's stock is up by about 5% over the last six months compared with a 25% increase in the DJIA. Congress has been talking about heavily regulating the credit-ratings companies after they missed the dangers of mortgage-backed securities. There were claims that Moody's and S&P's ratings were influenced by the size of customer payments.
Moody's is also facing more competition. Companies, including stock and mutual fund-rating firm Morningstar, are using the problems with Moody's reputation to move into the industry. Moody's profits have also been under pressure and net income dropped to $100 million in the third quarter, compared to $113 million in the same period a year ago.
Moody's might survive the blow to its reputation and its earnings problems, but stock sales by Buffett are often considered a kiss of death.
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