Prof. Buffett's Gradebook: F for NetJets, Moody's

What happens when Warren Buffett takes a hit?

This year, according to Forbes, Buffett was the biggest loser among its list of the world's billionaires. The "Oracle of Omaha" alone lost $10 billion in 12 months and is now worth $40 billion. Shares of Berkshire Hathaway (BRK.A Quote) shed 20% of their value through the economic crisis.

Losing $10 billion directly violates Buffett's two rules to investing: don't lose money and don't forget rule No. 1.

Over the past months, two companies have come into the spotlight after receiving failing grades from Professor Buffett: NetJets and Moody's (MCO Quote). Both companies have underperformed and, in return, felt the Oracle's wrath.

NetJets

NetJets was founded in 1986 by Richard Santulli. Buffett, a loyal customer, acquired the company in 1998 for $725 million in cash and stock. The company is designed to allow individuals and companies part ownership in aircraft for personal use. However, when the economic crisis struck, even the most affluent individuals had to cut back on luxuries. NetJets took a huge hit.

Under the command of CEO Santulli, the company posted a loss of $96 million in the first quarter of 2009 and more than $250 million in the second.

Seeing that the company now had more planes than customers, Berkshire Hathaway responded by cutting 5% of the company's staff. One of the more than 300 people let go included Santulli. The founder stepped down after nearly 25 years with the company. David Sokol, chairman of Berkshire Hathaway's MidAmerican Energy Holdings, was put in charge of restructuring the floundering subsidiary into a profitable enterprise.

Although NetJets hasn't performed well in the past, Buffett's actions show that he hasn't lost faith in the firm. Instead, with the Oracle's intervention and an easing economy, it may be able to take off once more.