The Bank of Buffett

As the faithful gather in Omaha this weekend for Berkshire Hathaway Inc.’s annual shareholder rumpus, two key questions will be top of mind.

How much See’s peanut brittle willCEO Warren Buffett, 88，包装？周二的宣布背后是伯克郡将为阿纳达戈石油的竞标提供10亿美元的优先股和保证投资？

The answer to the first is anyone’s guess. As to the second, look to the mountain of cash — nearly $112 billion at last count — on Berkshire’s balance sheet. Buffett is engaged in几乎是Sisyphean的努力to put that money to work profitably.

融资让佛佛龙的竞争对手提供。这是证据表明，巴菲特希望在今天的泡沫股票市场上作为贷方而言，最好的回报比股票拣选者更好。它还遵循主分配器的扩展干贴片。

“伯克郡银行仍然开放，”芝加哥金融出版商晨星晨星部门战略师傅的Greggory Warren在一个研究中。“我们鼓励我们终于将伯克希尔终于把资本付钱。”

The financing deal is certainly a humdinger — and proof of Buffett’s ability to leverage Berkshire’s reputation for advantageous terms. The preferred stock, redeemable after 10 years, will yield 8 percent at a time when comparable Treasury bonds throw off 2.54 percent. The warrant, exercisable until one year after the preferred is redeemed, is for the purchase of 80 million Occidental shares at $62.50 each. They closed Thursday at $57.35.

“You can’t get that kind of yield in a preferred security with an 11-year warrant,” said Mark Curnin, co-founder of White River Capital, a hedge fund specializing in financial stocks. “That warrant is likely to be worth well in excess of $1 billion.”

“The deal offers an extraordinary risk-adjusted return, particularly given prevailing interest rates,” Curnin added.

The big question is whether Berkshire can make a go of it as a full-throttle lender, as opposed to a common stock investor. “Why not pretend to be a bank?” asked Meyer Shields, an analyst at Keefe, Bruyette & Woods. “I think it’s a great way to look at it.”

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Berkshire did not respond to an email seeking comment. Occidental did not return a phone call.

Berkshire has danced this number before. In September 2008, amid the carnage of the financial crisis, the firm bought $5 billion in preferred stock yielding 10 percent from Goldman Sachs Group, together with warrants to purchase $5 billion of common stock. Little more than a week later, it struck a similar deal with General Electric for $3 billion of preferred and warrants. And in 2011, Berkshire paid $5 billion for Bank of America preferred stock yielding 6 percent plus warrants. Today, the Omaha powerhouse isBank of America’s largest shareholder.

Buffett made billions from these transactions. “It proved absolutely successful during the financial crisis,” said Shields.

Berkshire’s positions in banks and other lenders recently dominated its roster of top public holdings. In addition to Bank of America and Goldman, as of December 31 these included American Express, Bank of New York Mellon, JPMorgan Chase, U.S. Bancorp., and Wells Fargo.

Lenders’ post-financial crisis stock performance has badly lagged that of the overall market. Theyrepresent compelling value在技​​术股票价格上涨和私募股权令人市场的时代。白河首都的Curnin表示，尽管利率顽固，但很可能是巴菲特认为贷款作为一个非常好的业务，特别是银行的支持资本基础和股权的强大回报。

Still, if Buffett seeks to ramp up such deals, he will need to attract a greater volume and variety of borrowers than those after the imprimatur of a sterling creditor like Berkshire. “The farther you go out into conventional lending, the less value that imprimatur brings,” said Thomas Russo of investment firm Gardner Russo & Gardner.

Of course, waiting for the next financial crisis for Berkshire to shine isn’t much of a strategy.

Buffett’s high profile deal with Occidental “says to people around the world that Berkshire has incredible resources,” according to Curnin. “He’s done that repeatedly.”