In their regulatory filings from August 15, Warren Buffett’s holding conglomerate, Berkshire Hathway (BRK.A), and Cascade Investments, the investment vehicle of Bill Gates, revealed that they had trimmed their holdings in Deere & Company. Berkshire sold 1.3 million shares or nearly 6% of its stock holdings of Deere. Its current stake now stands at 22.0 million shares, which is around 6% of the shares outstanding of the company. Cascade Investments, which also happens to be Deere’s largest shareholder with 31.4 million shares, revealed that it sold 85,000 shares in open market transactions.
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Less than a week before Deere’s (DE) 3Q16 earnings release, Moody’s Investor Service (MCO) changed its outlook on Deere from stable to negative. Moody’s based the rationale for its outlook on the lengthy weakness in farm (DBA) equipment demand, which has led to lower company cash flows and profits for the third consecutive year in 2016.
In its note, it added, “The weak equipment demand is unprecedented in its severity and length, but is driven by an unusually strong string of crop harvests which led to excess grain supplies and pushed down commodity prices. Moody’s current outlook for 2017 points toward flat market conditions with respect to agricultural (MOO) commodity harvests and pricing. Consequently, the company’s operating performance could remain under pressure for another year.”
The rating agency, however, reaffirmed the A2 long-term ratings and Prime-1 short-term ratings of Deere & Company. In times as recent as April 2016, Moody’s has also downgraded the outlook on Deere’s competitor Caterpillar (CAT) from stable to negative while maintaining its A2 long-term and Prime-1 short-term ratings.