Buffett wrote down U.S. Bancorp, Swiss Re after SEC inquiry

(Bloomberg) -- Warren Buffett's Berkshire Hathaway Inc. wrote down the value of holdings in U.S. Bancorp, Sanofi-Aventis SA and Swiss Reinsurance Co. after a query from the Securities and Exchange Commission over valuations.

The adjustments to the equity stakes were made to Berkshire's fourth-quarter results in its annual Form 10-K report, according to a Feb. 4 letter from Omaha, Nebraska-based Berkshire to the regulator. The letter was filed Monday on the SEC's website.

"As a result of our discussions, we recognize that the staff" of the SEC believes that impairments on the investments may be required according to generally accepted accounting principles, Berkshire Chief Financial Officer Marc Hamburg wrote.

Berkshire, which held $61.5 billion of equities as of Dec. 31, was asked by the SEC in January for more information about stockholdings that traded below the prices paid by the company. The firm recorded equity impairments of $938 million in the fourth quarter.

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Berkshire told the SEC that it wasn't writing down its holdings of Kraft Foods Inc. and Wells Fargo & Co. because it expects the stocks will recover.

Wells Fargo Outlook

"Wells Fargo reported record earnings for the year ended December 31, 2010, and its financial condition is strong," Hamburg said. "The financial condition and business prospects of Wells Fargo are expected to remain strong."

The San Francisco-based bank's stock advanced 3.1 percent this year through last week. Kraft, based in Northfield, Illinois, is little changed.

Berkshire considers the holdings of Minneapolis-based U.S. Bancorp, Zurich-based Swiss Re and Paris-based Sanofi-Aventis long-term investments, with each showing favorable financial conditions and business prospects, according to Hamburg's letter.

This "suggests that it is likely that the market prices of each of these securities will recover to a level equal to or greater than our cost basis," he wrote.

Unrealized losses of more than 12 months on equity investments narrowed to $531 million on Dec. 31 from $2.7 billion a year earlier, Berkshire said in its annual report. The Wells Fargo stake accounted for $384 million of that unrealized loss, Berkshire said.