It’s Hunting Season for Warren Buffett

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Aug 21 2007
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While most investors were cracking their head on what should be their next step in the current mini economic crisis in U.S., one person is grinning with smile. Such crisis actually presents an opportunity for those who are contrarian in their investment methodology. But such method is not for everyone, at least not for those who do not have deep pocket and easily panicked when the bloodshed spills all over the trading counters.

Warren Buffett, the legendary investor whose empire, Berkshire Hathaway (NYSE: BRK.A, stock) is worth a whopping US$120,700.00 per share in the New York Stock Exchange, is said to be eyeing the troubled and largest mortgage lender, Countrywide Financial Corp. Warren already has stakes in Bank of America Corp and Wells Fargo & Company, the six and second largest mortgage lenders in U.S. respectively.

warren buffettBuffett told TV network CNBC last week that the worsening credit and housing markets may present some “real” investment opportunities. So, are we watching how this legendary wizard works his way in becoming the super-tycoon in mortgage lending business?

Meanwhile, Warren had increased his stake in Burlington Northern Santa Fe Corporation (NYSE: BNI, stock) which FinanceTwitter had highlighted back in April 2007. Warren’s Berkshire is reported to have bought 1.4 million more shares BNI from 15th Aug to 16th Aug at prices around $76.5 and $78.96 per share. After the 1.4 million shares purchased last week, Berkshire now owns 42,049,230 shares of BNI which is about 12% of total outstanding shares – these shares are worth more than $3.3 billion today.

Besides, Warren also had added Union Pacific Corp. (NYSE: UNP, stock) and Norfolk Southern Corp. (NYSE: NSC, stock), two other railroad companies into his portfolio. Buffett together with his long-time partner Charlie Munger, Vice Chairman of Berkshire Hathaway, said both of them never like railroad business because they needed large amounts of capital, had tough unions, and stiff competition from the trucking business.

But now the railroad industry has a competitive advantage by double-stacking freight and with all of the imports from China, the U.S. has a huge amount of freight being sent across the county. “I’ve got an elephant gun, I just can’t find the elephant,” Warren Buffett said during an interview. With about $50 billion in cash, Buffett is seen to look into other new areas for investment ideas.

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