Buffett moves into bond insurance
It’s never wise to bet against the Oracle of Omaha, Warren Buffett. It looks like he’s using the substantial resources of Berkshire Hathaway to move into the bond insurance arena. Bond insurer’s are the ones left holding the bag IF the entity which issued the bonds (business or government) defaults on the bonds they’ve sold and can’t pay the bond holders back.
I think it’s significant that Buffett is moving into this field with a fresh start - it would’ve been much easier to simply buy one of the companies that already issue bond insurance. Since Buffett has in excess of $40 billion laying around returning money market rates, it would have been easy for him to buy a current player at sale prices. Since he didn’t, what does that tell you about the current bond insurer’s? Hint: The sub-prime fiasco has yet to bottom out. Buffett knows this and decided to get in the business before the others went bankrupt.
Anyway, good article on it here:
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Tags: bonds, sub prime, Warren Buffett