Monday, 9 February 2009

Warren Buffet mines Gold with Swiss Re deal

Warren Buffet has done it again....

Warren has mined gold with previous deals with General Electric and Goldman Sachs when he provided them with desperately needed cash.
The terms of the deal with those have been sweetener to the shareholders of Berkshire Hathway and has also lead an example of bargain hunting.

Warren Buffet has always being limelight for his extra-ordinary sight for bargain deals. He is the fervent disciple of Benjamin Graham, who changed the thinking about the investment in the stock market.

Warren Buffet's call of not investing in last years and sitting on pile of cash has paid off with immensely huge returns.

what you see on the right side is the Head Qaurters of the Swiss Re. Berkshire Hathway has provided cash of $ 2.6 billion to swiss Re (world's second largest re-insurer).

Investment : $ 2.6 Billion

Type of Investment : Convertible Coupons(notes)

Guaranteed Rate of Return (coupon rate) : 12%

Options: Convert @ 25 Francs per share (common stock)

Option Expiry : 3 (three) years.

Other Option : Get perpetual returns of 12% on the loan provided.

Current Interest rate: Almost Zero....

The stock is currently trading at 16 francs.

Warren Buffet has not let an opportunity go unattended. He has taken full advantage of the available opportunity.

A really good example for us to learn to invest.