Warren Buffett has been doing some shopping at Tiffany's just before Valentine's Day, but he's not taking anything home in a baby-blue shopping bag.
In a filing with the SEC today, Tiffany says it has sold $250 million of debt to some Berkshire Hathaway subsidiaries. The jewelry retailer will use the money to "refinance existing indebtedness and for general corporate purposes."
As has been the case repeatedly in recent months, Buffett will get a good return for his money: 10 percent a year.
Half the loan is due to be paid back eight years from now. The other half is due ten years from now. Berkshire will get lump sum repayments when those notes reach maturity.
Tiffany may actually be getting off easy with a 10 percent payout. Buffett got 12 percent for his Swiss Re investment last week, and 15 percent from Harley-Davidson a few days before that.
His multi-billion dollar investments in General Electric and Goldman Sachs both pay 10 percent a year.
On Forbes.com today, Atalanta/Sosnoff Capital founder Martin Sosnoff writes glowingly about Buffett's Deadman's Hand:
"Although Buffett is on record that the stock market is in a fundamental buying range, over the past several months tens of billions got earmarked for defensive, fixed-income investments with equity kickers. In short, Berkshire Hathaway's portfolio seems headed closer to a balanced construct rather than pure equities.
Investors can learn a lot from this gambit. Obviously, we odd lotters can't negotiate privately issued convertible preferreds with 12% yields. But we can buy A-rated preferreds like those from JPMorgan Chase and Viacom yielding 9%."
We'll find out soon if Berkshire was also buying stocks as prices fell last fall.
