Intelligent Investor Club

In the midst of the financial crisis, Warren Buffett has moved in to buy over a company – at a bargain price.

Constellation Energy, a company which is the nation’s largest competitive supplier of electricity to large commercial and industrial customers and the nation’s largest wholesale power seller, was bought over by MidAmerican Energy Holdings Company, a subsidairy of Berkshire Hathaway.

The purchase was paid for in cash for abuot $4.7 billion, or $26.50 per share. For the record, Constellation’s stock closed at $58.37 last Friday and finished 2007 at $102.53.

…Continue reading » Warren Buffett Buys Over Constellation Energy

This year’s “Power Lunch with Warren Buffett” charity auction has been won by Zhao Danyang of the Hong-Kong based Pure Heart China Growth Investment Fund with a record high bid of $2,110,100.

Zhao is an early investor in China’s class-A shares and has an investment philosophy very similar to Warren Buffett.

He has previously liquidated all five of his firm’s mainland funds to lock in profits from China’s market enormous gains. He started selling when price to earnings ratio grew too high.

Warren Buffett once again shows his preference for investing in easy to understand businesses when he teams up with candy maker Mars to buy Wm Wrigley Jr, the world’s largest chewing gum meaker for US$23 billion.

The recently announced deal meant that Berkshire Hathaway will have a minority stake in Wrigley. The purchase price of US$80 a share is a 28 per cent premium over Wrigley’s closing price of US$62.45 last Friday.

Some lucky postgraduate students from the National University of Singapore got a chance to visit Warren Buffett during a recent study trip to the US in February 2008. It was the first time an Asian university held a dialogue with the investment guru.

The 21 Master in Business Administration or MBA students also visited companies like Apple and Google in Silicon Valley in San Francisco.

But the highlight of their study trip was a personal session with Warren Buffet in Omaha.

I don’t have any details of what Warren Buffett said to them but if the past is any guide, it should be something similar to this:

Warren Buffett Speaks at University of Florida

This video is hidden among a ton of posts here so I thought it would be good to bring it up again.

Warren Buffett mentioned in an interview with CNBC this morning that he has a plan to help the troubled bond insurance situation, but so far it’s not getting a very warm reception.

Warren Buffett had offered to reinsure $800 billion in municipal bonds now insured by Ambac, MBIA and FGIC, effectively giving them a AAA credit rating. Due to problems with subprime mortgages and other loans, those insurers are in danger of losing their AAA credit ratings.

…Continue reading » Warren Buffett to Bail Out Bond Insurers

Dispelling rumors running in the market, Berkshire Hathaway (BRK.A) chief Warren Buffett says they have no plans to bail out troubled bond insurers MBIA (MBI) and Ambac (ABK).

In an interview with FOX Business anchor Liz Claman, Warren Buffett said his strategy is to create new companies in the sector, rather than bailing out existing troubled ones.

“We could have some kind of insurance transaction with them but we will not be investing in them or any other bond insurer. We’ve got our own bond insurer.”

Berkshire Hathaway Assurance, Warren Buffett’s newly created bond-insurance company, is already up and running in New York State and has done “a couple” of deals.

After missing a deadline to raise capital, the world’s fourth-largest bond insurer, Financial Guaranty Insurance Co., had its AAA credit rating cut to AA at Fitch Ratings.

The insurance unit’s top rating was placed under review by Fitch, Moody’s and S&P in December after downgrades of securities backed by subprime mortgages. Fitch gave the company until this week to boost capital by $1 billion.

…Continue reading » More Subprime Woes

This week, Warren Buffett paid close to $74 million for about a million shares in Burlington Northern Santa Fe. This pushes Berkshire’s stakes to nearly 18 percent.

The buying of Burlington shares has been picking up speed of late. Last week, another 750,000 shares were bought. There was a purchase made almost every day of that week.

In a filing made earlier, Berkshire says it paid $11.05 million for a total of 141,400 shares bought at $78.18 each on Monday. On Tuesday, they brought 807,400 shares at $77.69 each, for a total price of $62.73 million.

Berkshire Hathaway Assurance, Warren Buffett’s  newly setup bond insurance firm, has insured bonds for the first time on Tuesday.

It was reported by Reuters that Goldman Sachs bought insurance for their $10 million worth of bonds from New York City.

…Continue reading » Berkshire Hathaway Assurance Insures Bonds

The Fed had just cut rates by 25 basis points. This is the headline I see from Yahoo news.

“Stock Falls After Fed Cuts Rate”

This is another headline I see from the previous month:

“Stocks Rise on Fed Cut” 

If you are a long term investor, should you even be concerned with whether the Fed is cutting or raising rates? This is what Warren Buffett has to say:

…Continue reading » Fed Rate Cuts to an Investor