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Warren Buffett Watch

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  Thursday, 14 Feb 2008 | 9:46 AM ET

Berkshire Hathaway Shares Soar 14% from January Low

Posted By: Alex Crippen

As the financial world continues to furiously debate Warren Buffett's offer to reinsure billions of dollars worth of municipal bonds, shares of Buffett's holding company continue to recover from their January low.

Berkshire Hathaway closed today (Wednesday) at $143,980 each, up $4280, just over 3%, on the day. It's the first close above $140K this year and a two-month high for the stock.

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  Wednesday, 13 Feb 2008 | 6:51 PM ET

Why FMC's a Buy

Posted By: Tom Brennan

Cramer’s always on the lookout for bull markets, and there seems to be a silent one raging in soda ash, he said. No, it doesn’t sound exciting. But Warren Buffett made billions off boring stocks.

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  Tuesday, 12 Feb 2008 | 3:23 PM ET

Markets Debate Buffett's Bond Offer (Good And Bad)

Posted By: Bob Pisani

The Buffett offer to take over the insurance liabilityof the municipal bond part of the mortgage insurers portfolio is causing a lot of debate on the Street.

The general conclusion is, good for municipal bond holders, good for furthering a solution to another piece of the credit mess, but bad for the bond insurers, and the market is reflecting that in the down prices of the insurers today.

The reason it is not a good deal for the bond insurers? This is no bail-out. The insurers are left with risky CDOs, the counterparty risk remains for banks and brokers, and--most important of all--this offer may not prevent a ratings downgrade, even though it would free up some capital.

So it's fairly clear the companies do not want this deal. Still, if the ratings are downgraded, Buffett may still make this deal happen because it's likely a solution by the regulators would be sought and he would be brought in to "save" the muni part.

The best hope for the bond insurers at this point appears to be some kind of bail-out by the banks and brokers, who hold significant counterparty risk. But where is the offer? Nothing yet.


Questions? Comments? tradertalk@cnbc.com

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  Tuesday, 12 Feb 2008 | 2:49 PM ET

Buffett Sees Stocks In "General Range of Fair Value": CNBC Interview Transcript (Part 2)

Posted By: Alex Crippen
Warren Buffet
Warren Buffet

This morning on CNBC's Squawk Box, Warren Buffett publicly revealed for the first time that he has offered to reinsure $800 billion in municipal bonds now covered by the troubled insurers MBIA, Ambac and FGIC.

Here is a video and transcript of the second part of this morning's live phone conversation, which also includes Buffett's comment that stocks are in the "general range of fair value" right now. This is a continuation of the transcript of this morning's conversation. The first part is posted separately .

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  Tuesday, 12 Feb 2008 | 2:21 PM ET

These Days, Even Minor News Can 'Buffett' Stocks

Posted By: Jeff Cox,|Special to CNBC.com

The markets had a Warren Buffett rally on Tuesday, but tomorrow's news could just as easily send stocks plummeting again.

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  Tuesday, 12 Feb 2008 | 2:01 PM ET

Buffett Puts Bump Into Stocks, Credit Markets

Posted By: Patti Domm

Warren Buffett's offer to back the municipal bond portfolios of three monoline insurers has put some bounce into stocks today, and it's also waking up the credit markets.

Buffett's proposal to have his Berkshire Hathaway guarantee the $800 billion municipal bonds covered by three troubled insurers is giving a big boost of confidence to a market made anxious by the possibility those insurers could be downgraded. One of the insurers has already turned down Buffett's offer , but still the market is upbeat on the idea that the billionaire investor is willing to step up. Buffett announced his offer in a phone call to "Squawk Box" this morning.

The financial markets have worried that possible ratings downgrades of the insurers--Ambac , MBIA and FGIC--would in turn cause a ripple in the muni market, where the bonds they insure would be impacted by their weakened ratings. That conceivably would make it more expensive and difficult for municipalities to get financing and cause havoc in the secondary market.

Today, the flight-to-quality trade in place in Treasurys yesterday is reversing, and the muni bond market is seeing some action it hasn't seen in awhile.

"It's created buying interest in the muni market today," said Jon Fiebach, managing director of Duration Capital, which runs a municipal bond hedge fund. "We're seeing better bids than we've seen for quite some time. My traders are definitely on the offer side for the first time in three months. We've gotten bidders for bonds. I don't know if it's created a floor, but it's created some type of confidence. There are people buying munis right now."

Fiebach says there is nothing wrong with the underlying muni bonds, but the market has acted as if they are broken. If Buffett succeeds, "it restores the ability for municipalities to fund their short term liabilities, which is where the problems have been. The money markets have been puking back any insured paper, even the highest grade."

The fear factor in the market has resulted in some odd mispricings. "Uninsured bonds of the same credit are trading at a higher price than the state of Washington bonds that have an additional guarantee of an insurance," said Fiebach.

Shares of Ambac and MBIA were under pressure today. Traders say the two companies may balk at the Buffett plan because they basically would be saddled with their troubled CDO portfolio while Buffett rides off with the municipal bond business.

"The monolines are like hard boilded eggs. They're already cooked. It's not going to save the monolines. The reason Buffett's comment is important is because everybody thought the secondary market in munis was going to get murdered," said CNBC's Rick Santelli, who spends his time talking to traders in Chicago's futures pits.

Questions? Comments? marketinsider@cnbc.com

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  Tuesday, 12 Feb 2008 | 11:09 AM ET

Markets Up On "Efforts" To Solve Credit Crisis

Posted By: Bob Pisani

Rally on strength in cyclicals, agricultural stocks, insurance and banks. Markets are up for a couple reasons this morning. Most importantly, there is a sense that efforts are being made to address the credit problems, whether it is:

a) Major players in the mortgage business offering to freeze foreclosure for 30 days in an effort to get home owners into longer-term, more stable mortgages they can afford.

b) As mentioned before , Buffett offering to assume $800 billion of municipal bond-related insurance liabilities from Ambac , MBIA and FGIC. The good news here is that it would free up capital for these companies, but more importantly it would prevent contagion into a healthy market (munis) by separating the businesses into "good" (munis) and "bad" (CDOs).

Also, one trader noted to me that Buffett had said stocks appeared to be fairly valued; while this is hardly a ringing endorsement of the market, it does appear to be an improvement over last year, when he said he couldn't find any value in the market.



Questions? Comments? tradertalk@cnbc.com

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  Tuesday, 12 Feb 2008 | 10:11 AM ET

Buffett's Big Muni Bond Offer: CNBC Interview Transcript (Part 1)

Posted By: Alex Crippen

This morning on CNBC's Squawk Box, Warren Buffett publicly revealed for the first time that he has offered to reinsure $800 billion in municipal bonds now covered by the troubled insurers MBIA, Ambac and FGIC.

That would effectively give those bonds a AAA credit rating. So far, he says one insurer has turned him down and he hasn't heard from the other two.

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  Tuesday, 12 Feb 2008 | 9:58 AM ET

Warren Buffett Says Berkshire Not Interested in Troubled Bond Insurers

Posted By: Alex Crippen

Warren Buffett says Berkshire Hathaway won't be investing in any troubled bond insurer, including Ambac and MBIA .

Buffett told Fox Business anchor Liz Claman:

"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."

He's referring to the newly-created Berkshire Hathaway Assurance Corp., which "tip-toed" into the New York bond insurance market last month.

Last week, we learned a group of state regulators is working with Berkshire on a single "streamlined" application for licenses to sell bond insurance in all 50 states.

Buffett said in late December that his new bond insurer won't make the same mistakes that Ambac and MBIA did, charging too little and taking on too much risk. It looks like Buffett doesn't want to be stuck with the fallout from those mistakes, so he won't be buying into the companies that made them.

In early January, Buffett's top insurance executive, Ajit Jain, had told us Berkshire was talking to Ambac and MBIA about a possible partnership or purchase sometime in the future.

We could hear more from Buffett later today on the bond insurers and other subjects, when he appears in Toronto at a Business Wire event.

Berkshire's current price:

Questions? Comments? Email me at buffettwatch@cnbc.com

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  Tuesday, 12 Feb 2008 | 9:49 AM ET

Warren Buffett to CNBC: I Will Reinsure $800B in Municipal Bonds

Posted By: Alex Crippen

Warren Buffett tells 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.

In a live telephone call to Squawk Box, Buffett offered to reinsure $800 billion in municipal bonds now insured by Ambac, MBIA and FGIC, effectively giving them a AAA credit rating.

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About Buffett Watch

  • Warren Buffett is arguably America’s most-admired and most-followed investor. Buffett is the largest shareholder and CEO of Berkshire Hathaway and one of the world’s most famous and most generous philanthropists. Legions of investors - from all walks of life - follow Buffett's homespun investment philosophy: invest in what you know, invest in value. Here on CNBC.com's Warren Buffett Watch, we’ll keep you up to date on what the “Oracle of Omaha” is doing by following Buffett's trades, words and deeds.

 

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