No. of Recommendations: 0
will this badly ? "" WARREN BUFFETT WATCH
Satellite radio exchange play slides underwater as bet increases
Berkshire Hathaway has been steadily adding this year to its positions in two tracking stocks (LSXMA and LSXMK) connected to Liberty Media's Sirius XM radio service.
In SEC filings tonight (Friday) three hours after the market close, it disclosed the purchases over the past three days of another 1.9 million shares for $50.1 million.
Combined with shares it bought on April 4 through April 8, it has spent $147.3 million so far this month and almost $1.2 billion since January 2.
The apparent goal: take advantage of a price differential in an upcoming reorganization that was announced in mid-December in which each tracking stock share will be exchanged for 8.4 shares of Sirius XM Holdings (SIRI).WARREN BUFFETT WATCH
Satellite radio exchange play slides underwater as bet increases
Berkshire Hathaway has been steadily adding this year to its positions in two tracking stocks (LSXMA and LSXMK) connected to Liberty Media's Sirius XM radio service.
The apparent goal: take advantage of a price differential in an upcoming reorganization that was announced in mid-December in which each tracking stock share will be exchanged for 8.4 shares of Sirius XM Holdings (SIRI).At the beginning of the year, it looked like a good deal. SIRI was trading at $5.49 per share, putting the exchange value at more than $46 for a tracking share then valued at less than $30.
Since then, however, SIRI has dropped by more than 41% to close at $3.21 today.
In the last week, based on SIRI's closing price each day, the value of the shares Berkshire would receive for the tracking stock shares it has bought this year has dropped below what it paid for them.
As of tonight, Berkshire has paid $1.18 billion this year for 40.3 million tracking shares that would, at SIRI's current price, be exchanged for 338.6 million shares valued at $1.09 billion, for a loss of around $90 million.
It's also lost money, on paper, just with the tracking shares it has bought this year. Based on tonight's close, they are valued at just over $1.0 billion.
Things could change before the exchange takes place. It's expected to happen in this year's third quarter, although it could come earlier.
Berkshire may be playing another game altogether, but right now it looks like the money it has spent adding to its LSXMA and LSXMK positions this year isn't going to be a winning investment."
No. of Recommendations: 0
Warren Buffett Watch, from that same source, " Berkshire avoids massive sell-off for insurance stock hit by fraud allegations
Berkshire Hathaway completely eliminated what had been a three-quarters of a billion dollars position in Globe Life just months before fraud allegations this week cut the insurance company's stock price by almost half.
In a lengthy post on its website yesterday, short-seller Fuzzy Panda Research said it had "uncovered extensive allegations of insurance fraud ignored by management despite being obvious and reported hundreds of times," including "policies written for dead and fictitious people ... forged signatures ... funds withdrawn from consumers' bank accounts without approval ... fictitious bank accounts used to fund numerous fake policies, so agents hit their bonuses."
It also accused executives of involvement in a "bribery & kickback scheme that a lawsuit estimates netted them >$65 million."
