Scott Patterson reports:
Warren Buffett must be in a romantic mood ahead of Valentine’s Day.
The Oracle of Omaha’s Berkshire Hathaway bought $250 million of debt from jewelry giant Tiffany & Co. The debt sports a yield of 10%, according to Tiffany’s filing with the Securities and Exchange Commission. Half of the notes are redeemable in eight years, the other half is redeemable in 10 years. New York-based Tiffany said it will use the proceeds to refinance existing debt and for general corporate purposes.
The investment is the latest in a series of deals in which Berkshire has scooped up securities with yields of 10% or more as the cash-rich firm takes advantage of cash-starved companies. In late September, Berkshire bought $5 billion of Goldman Sachs Group preferred stock yielding 10%. It has also purchased high-yielding debt or preferred stock from General Electric, Swiss Re, Harley Davidson and a handful of other companies.
It’s an intriguing strategy for Mr. Buffett. A number of analysts and Buffett watchers have questioned whether the investor has lost his mojo amid the latest market mayhem. Berkshire’s stock lost 32% in 2008, hurt by large holdings such as Coca-Cola and Burlington Northern Sante Fe.
But with the market in such turmoil, it’s hard to argue with investments that lock up a 10% yield or more over the next decade, Mr. Buffett’s legions of supporters say. Investors now eagerly await Berkshire’s quarterly filing of its holdings, expected some time in the next several days.
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The Essays of Warren Buffett: Lessons for Corporate America, Second Edition by Warren E. Buffett
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