Intelligent Investor Club

Last week, Warren Buffett put $2 billion of Berkshire Hathaway’s cash to work by buying high-yield bonds issued by Dallas-based power producer TXU Corp.

Berkshire(NYSE:BRK) bought into two bond issues by TXU. One was a $1.1 billion purchase of 10.25% bonds at 95 cents on the dollar to give Buffett an effective yield of 11.2%. Berkshire also bought $1 billion of 10.5% PIK-toggle bonds (bonds whose interest can be paid out in cash or more bonds) for 93 cents on the dollar, giving an effective yield of 11.8%.

Back in 2002, Berkshire had actually purchased stock in TXU when it appeared close to bankruptcy, and then sold out at a large profit in 2004.

A soon-to-be released report of a study by Professor Gerald Martin of American University in Washington and Professor John Puthenpurackal of the University of Nevada has shown that investors would have earned close to twice the returns of the S&P 500 Index during the past three decades just by buying the same stocks that Warren Buffett did.

…Continue reading » The Results of Copying Warren Buffett

Here’s an update of the changes to Berkshire Hathaway’s holdings based on their latest 13F filing for the quarter ended 30th September 2007. Some of this would already have been known to you.

…Continue reading » Updates of Berkshire’s Holdings

Just yesterday, I wrote a post about supermodel Gisele Bundchen dumping the US dollar. The source of my news was from Bloomberg. Apparently, the news was not so accurate. Gisele Bunchen’s manager, Anne Nelson, has pointed out that the information was completely fabricated and untrue.

Oh well, even Bloomberg gets it wrong sometimes.

…Continue reading » Bloomberg Got it Wrong on Gisele

Brazilian supermodel Gisele Bundchen has joined Warren Buffett and other billionaire investors in concluding that the US dollar is going to depreciate further. Patricia Bundchen, her twin sister and manager, said that contracts in Euros are more attractive. “We don’t know what will happen to the dollar.”

…Continue reading » No More US Dollars For Supermodel Gisele Bundchen

A week after Warren Buffett sold its entire stake in Petrochina, Warren Buffett warned investors to be cautious about the Chinese stock market, which has risen nearly six times in the last two years.

…Continue reading » Warren Buffett Warns of an Overheated China Market

We know that Warren Buffett has been paring his stake in Petrochina. In an interview on Fox Business a few days ago, Warren revealed that Berkshire’s entire stake has been sold. The reason was selling was due to valuation and not over the company’s role in the Darfur. The investment bagged Berkshire a profit of $3.5 billion on an initial investment of $500 million. You can watch the entire 5-min interview here.

Earlier on, we had speculated on what currency Warren Buffett was actually holding. The mystery currency that Warren Buffett bought turned out to be the Brazilian Real.

Warren Buffett said in an interview on Fox Business Network, “If you told me 10 years ago I would buy the Brazilian real, you would, I would, have thought you were crazy,”.

…Continue reading » Warren Buffett Bought Brazilian Real

Warren Buffett’s Berkshire Hathaway reported on Monday that they have reduced their stake in railway companies Norfolk Southern Corp.  and Union Pacific Corp during the second quarter from Apr to Jun 07.

According to a Securities and Exchange Commission filing, Buffett’s holding in Union Pacific fell to 7.41 million shares valued at $853.4 million as of June 30, from 10.5 million shares on March 31, .

…Continue reading » Warren Buffett Trims Holdings in Norfolk Southern Corp and Union Pacific Corporation

Buffett’s Berkshire Hathaway holding company reveals in a series of filings with the SEC that it has exercised call options to puchase 7,847,818 shares of the freight railroad Burlington Northern Santa Fe.

This purchase raises Berkshire’s stake to 60,828,818 shares, or 17.2% of Burlington Northern’s outstanding shares.

In my previous post on this matter,  I mentioned that Buffett is developing a liking for railway companies. This trend looks set to continue.