I heard Buffett or Berkshire Hathaway is buying Countrywide. Can this be true? what's your opinion?

Originally posted in thread: 250

I wouldn't be surprised if Buffett eventually ventures some significant capital in the mortgage business. But, I would guess that he isn't making any large bets just yet. Perhaps he or Lou Simpson took some speculative nibbles at CFC common stock in the past few weeks.

If Buffett is to get really involved at some point, I believe it will come more in the form of something like what BAC just did with CFC. That is, in the form of a provider of liquidity to a desperate company. Of course, I would expect the terms in such a situation to be extremely favorable to Buffett and BRK; much more so than in the deal BAC just struck with CFC.

Had Buffett looked at CFC, the one thing he may have found attractive is the large and stable loan servicing business. That might serve to offset some of the unease I think he would have felt had he attempted to assess the "loan portfolio" and loan origination business. Seems to me that the BAC convertible deal is sufficient to have turned Buffett off for the time being.

'tato

Originally posted in thread: 250

I'm inclined to mostly agree with smallpotato. I believe that Buffett will buy the stocks of high quality companies related to but not directly involved in this mess. he will buy a significant stake in BAC. I also think he will take the chance to expand his stake in Moodys. both these business are high quality, especially Moodys. I have personally opened a stake in both, but I bought more Moodys.

I would not be surprised if he took a stake in CFC. its market cap is now $12b, and it is a it is a decent quality bank, selling at a very good price. however, I doubt he will get involved in a bidding war for the whole company.

and yes, like smallpotato, I can see Buffett offering CFC financing at terms favorable to Berkshire. I'm not sure that he'd buy any of their mortgages.

of course, I'm just a small-time investor, and Warren Buffett is Warren Buffett.

Originally posted in thread: 250

I would say that the BAC purchase of 2B in convertables is the laying of the ground work for an acquisition of CFC. BAC is probably doing their due diligence by assessing the loan quality of CFC. I don't think BRK is going in.

RML

Originally posted in thread: 250

Fargo, he is already in the mortgage business. Wells is one of the largest orginators in the US. If he was going to take a more direct position, I would think he would wait until there is a bit more of a shake-out. Things are hardly stable yet.

Originally posted in thread: 250

WB is sly like a Fox ( again)...LOL

He knows , back when it was  facing rumors of Bankruptcy, that it would be bailed out or taken over..

Buying it at or near it's bottom , has already yielded a +20% gain  so far and I suspect will be alot better in the following qtrs..

Myself/ I Just took some Options on it for 2008

Don't be surprised if it doubles by then, or more..

Not for the faint of heart....only for Gamblers..LOL

FYI- as one gets older, they either go oone of 2 ways..

Conservative to protect their $ or Take more risks to  Inhance/excite their lives..

I suspect WB is the latter now.. Like myself... ( especially with a small % of over all $ at stake )

What's the Downside risk? > "0 "

Upside? + 300% or more

 

 

 

WB has the general philosophy of buying (1) strong businesses, (2) with a wide economic moat that (3) are well managed.

My assessment is that countrywide has none of these attributes

Bob