Wednesday, August 22, 2007

I Don't Like Him Or His Politics, But The Man Knows An Opportunity


Countrywide lifts on talk that Warren Buffett will pounce

By David Litterick, in New York
Last Updated: 12:11am BST 22/08/2007

Playing his cards right: Buffett invested heavily in financial services groups
At almost every one of his annual meetings in Omaha for the past few years, Warren Buffett has talked of his desire to get back into the market with some major deals.
But by the time the next Berkshire Hathaway jamboree comes round, the company's cash pile remains unspent.
As he sought out attractive acquisitions, so too did the private equity companies that fought to land the next record buy. Asset prices soared, taking them out of reach of the Sage of Omaha who rarely shies away from expressing his distaste at the slash, burn and sell tactics of the private equity industry.
As a result, he now has almost $50bn (£25bn) to spend and, with stocks falling fast and private equity unable to borrow the cash they need, Mr Buffett's time may have come. Shares of Countrywide Financial, the largest US mortgage lender hamstrung by the sub-prime crisis and credit crunch, enjoyed a rare lift yesterday on speculation Mr Buffett may be ready to pounce.
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Countrywide's debt-servicing business and portfolio of mortgages and mortgage-backed securities may be attractive to Mr Buffett, who has invested heavily in financial services groups with exposure to the US mortgage market even as others flee. Earlier this month, Mr Buffett's investment company Berkshire Hathaway disclosed an investment in Bank of America, one of the six largest US mortgage lenders. Berkshire is a long-time shareholder in Wells Fargo, the second-largest US mortgage lender.
"I can spend money faster than Imelda Marcos when things are right," he told The Wall Street Journal, and last week said the worsening credit and housing markets may present "real" investment opportunities.
Speculation is mounting that Mr Buffett has been contacted by several struggling mortgage lenders and backers of private equity deals. He has a history of helping alleviate financial problems by offering help to distressed companies.
In 1991, he took over as chief executive of Salomon Brothers, then in the midst of a criminal probe for a scandal involving the Treasury market. Many credit him today for shepherding Salomon back into the good graces of securities regulators and investors.
He came close to bailing out hedge fund Long-Term Capital Management but changed his mind because he wanted its stocks, bonds and other securities not its management company and complex partnership structure. "This is Berkshire Hathaway's market," Thomas Russo, partner at investment fund Gardner Russo & Gardner, told The Journal.
Mr Buffet said recently: "I'm definitely more popular than I was a few months ago. But I started from a low base." By David Litterick in New York
AT almost every one of his annual meetings in Omaha for the past few years, Warren Buffett has talked of his desire to get back into the market with some major deals.
But by the time the next Berkshire Hathaway jamboree comes round, the company's cash pile remains unspent. As he sought out attractive acquisitions, so too did the private equity companies who fought each other to land the next record buy. Asset prices soared, taking them out of reach of the Sage of Omaha who rarely shies away from expressing his distaste at the slash, burn and sell tactics of the private equity industry.
As a result, his cash pile has only grown higher. He now has close to $50bn (£25bn) to spend and with stocks falling fast, and private equity unable to borrow the cash they need, Mr Buffett's time may have come.
Shares of Countrywide Financial, the biggest US mortgage lender now hamstrung by the sub-prime crisis and subsequent credit crunch, enjoyed a rare lift yesterday on speculation Mr Buffett may be ready to pounce.
Countrywide's debt-servicing business and its portfolio of mortgages and mortgage-backed securities may be attractive to Mr Buffett, who has been investing heavily in financial services groups with exposure to the US mortgage market even as others flee.
Earlier this month, Buffett's investment company Berkshire Hathaway disclosed an investment in Bank of America, one of the six largest US mortgage lenders. Berkshire is also a long-time shareholder in Wells Fargo the second largest U.S. mortgage lender after Countrywide which is known for its conservative lending standards.
"I can spend money faster than Imelda Marcos when things are right," he told The Wall Street Journal, and just last week insisted that the worsening credit and housing markets may present some "real" investment opportunities.
Speculation is mounting that Mr Buffett, as one of the last men standing, has been contacted in recent weeks by a host of sellers - including struggling mortgage lenders and backers of private-equity deals.
He has a history of helping alleviate financial problems by offering help to distressed companies.
In 1991, he took over as chief executive of Salomon Brothers, then in the midst of a criminal probe for a scandal involving the Treasury market. Many credit Mr Buffett today for shepherding Salomon back into the good graces of securities regulators and investors.
He also came close to bailing out hedge-fund Long-Term Capital Management but eventually changed his mind because he wanted the firm's assets - its stocks, bonds and other securities - not its management company and its complex partnership structure.
"This is Berkshire Hathaway's market," Thomas Russo, partner at investment fund Gardner Russo & Gardner, told The Journal.
"I'm definitely more popular than I was a few months ago," Mr Buffet said recently. "But I started from a low base."

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