Today’s news on WSJ, SEC is probing Berkshire on their disclosure to Burlington shareholders. It that a way of SEC saying “step aside, or go down with them”
I think Buffet uses derivative mostly for traditional hedging and exposure modifying purposes - but generally takes a very conservative and non-speculative stance with respect to their utilization. Except I think that I recall that at one point he loved to sell/write options to earn fees because he always felt they were mispriced (risk was calibrated too heavily) - I wonder if the last (2) years had changes his mind at all!
> - I wonder if > the last (2) years had changes his mind at all! Considering that he continued to write CDS and index puts throughout 2008 i would guess it has only served to reinforce his view. http://www.berkshirehathaway.com/letters/2008ltr.pdf
NakedPuts Wrote: ------------------------------------------------------- > joemontana Wrote: > -------------------------------------------------- > ----- > > Buffet has a nice chunk of GS preferred. I > like > > Buffet but his opinion is not objective on this > > one. > > But his preferred his close enough to a debt > instrument that he’s more of a creditor than an > equity holders (warrants notwithstanding). > > I’ve yet to hear anyone focus on the substance of > Buffett’s argument. He may have made the > political point, but his larger point was that > it’s irrelevant who is on the other side of the > trade. More importantly (my POV now), the > structure of a syn CDO requires that someone is > short the deal, and given the size of the deal you > can expect that counterparty to be relatively > sophisticated. Buffet was only looking at half the story. The SEC isn’t going after Goldman because Paulson was short. If that was the case, then the SEC would be going after every single synthetic CDO. And they’re obviously not. The SEC is going after Goldman because Goldman let a party with a stake in the game (Paulson) pick the contents of the CDO, and then Goldman repped that an independent party picked the contents.