Buffett and Countrywide

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robertts12 08-26-2007, 9:03 PM | Post #205413 | 6 Replies

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

Originally posted in thread: 250

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Where did you hear this?

small potato 08-27-2007, 12:05 AM | Post #2430359

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

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buffett won't buy the whole bank

weiwentg 08-27-2007, 4:45 AM | Post #2430374

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

Related Topics Warren Buffett Berkshire Hathaway bank high quality

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BAC

rllucky 08-29-2007, 10:28 PM | Post #2431550

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