Some investors are still shell-shocked from the 2008 market collapse. 4 years after the devastating fall in markets, investors continue to be afraid and mutual fund assets continued to be withdrawn. As a result, investors are piling up on bonds or cash. PIMCO’s mini total return fund ETF (BOND) is up around 8%. For many, cash is viewed as a declining asset value with zero-percent interest and value that’s eaten away by inflation. Buffett views cash differently. Schroeder, who wrote The Snowball: Warren Buffett and the Business of Life, is familiar with Buffett’s way of thinking. She argued that to Buffett cash is a call option that can be priced. When the option is cheap relative to the ability of cash to buy assets, it is acceptable to hold lots of cash.
Bank Of America: Value Play (SeekingAlpha)
We all know that Warren Buffett likes big banks like Bank of America (BAC) and its competitors, Wells Fargo & Company (NYSE:WFC) and U.S. Bancorp (NYSE:USB). Buffett bought $5 billion worth of Bank of America last year. Does that make these institutions a wise value investment in a lousy economy and an unstable financial system? Banks today face a wide variety of risks that could destroy revenues and threaten future cash flow. The kind of risks faced by banks today are underscored by Bank of America, which has agreed to pay $2.43 billion to settle a lawsuit brought by former Merrill Lynch investors. The suit will reportedly cut Bank of America’s third quarter earnings by $1.6 billion. This suit demonstrates the precarious position even big banks are in these days and raises questions about their worth as a value investment.
Warren Buffett boosts stake in DaVita (BizJournals)
Billionaire investor Warren Buffett’s company has increased its stake in Denver-based DaVita Inc. to nearly 10.2 percent. Berkshire Hathaway Inc. of Omaha, Neb., on Monday disclosed its additional investment in DaVita in a filing with the Securities and Exchange Commission. Berkshire Hathaway first invested in DaVita Inc. (NYSE:DVA), a kidney dialysis company, last year.
Warren Buffett’s MidAmerican Purchases Two Wind Projects In California (ValueWalk)
Billionaire investor Warren Buffett has strengthened his position in the renewable energy market. MidAmerican Wind, a subsidiary of Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B), announced plans to purchase two giant wind farm projects in Tehachapi, California, from Terra-Gen Power LLC for an undisclosed amount. The projects: 132-MW Alta Wind IX and 168-megawatt Alta Wind VII, are a part of the Alta Wind Energy Center. They are likely to start operations by the end of this year, and will boost the capacity of the entire complex to 1,320 MW. Situated about 70 miles north of Los Angeles, it would be the world’s largest wind farm. Currently, about 1020 megawatts of energy is being produced there. The combined projects are expected to provide clean electricity to over 80,000 homes every year.
Buffett, IBM vie for ResCap (NationalMortgageProfessional)
Big Blue appears as though it will be giving Warren Buffett a run for his money in the $2.4 billion auction of the mortgage-servicing portfolio of bankrupt ResCap, The Post has learned. And that might be fine with the Oracle of Omaha. IBM, which is in the mortgage-servicing sector through its ownership of Seterus, has teamed with the Ocwen Financial Group to consider bidding for the ResCap portfolio at an Oct. 23 bankruptcy auction, a source close to the process said.
Warren Buffett’s kids use dad’s ideas to invest in giving (KOAA)
As they give away part of Warren Buffett’s fortune, his three children have adopted an approach remarkably similar to their father’s technique for making all that money. Like Buffett, each relies on tiny staffs. And whereas their father invests only in businesses he understands, they restrict their giving to targeted projects. Warren Buffett doesn’t direct how the foundations created by Susie, Howard and Peter Buffett spend the estimated $2.6 billion in Berkshire Hathaway stock they’ll receive, but his children seem to have absorbed his philosophy.
