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Thursday, November 15, 2012

HISPANIC BUSINESS: Warren Buffett Endorses Hillary Clinton in 2016

Nov 14, 2012 
Hillary Clinton
Billionaire investor Warren Buffett told CNN Wednesday he hopes Hillary Clinton will become the first female U.S. president in 2016.

"I don't see how you could have anybody better qualified," Buffett told CNN's Poppy Harlow in an exclusive interview about the U.S. secretary of state and 2008 White House hopeful who would be 69 if elected four years from now.

Clinton lost the Democratic presidential nomination in 2008 to then-Sen. Barack Obama and has served as secretary of state in Obama's first term. She has pledged to step down early in his second term, but has refused to talk about a political future.

"I like what she believes in," Buffett told the news network. "I think she's extraordinarily able and energetic for that matter in pushing those beliefs."

The Buffalo (N.Y.) News, a Buffett asset, has endorsed Clinton, who also served as U.S. senator from the state and was first lady during her husband Bill Clinton's two terms as president.

"We've barely finished a bruising, expensive campaign for president, but it's not too early to be thinking about who would make an excellent candidate for the presidency in 2016 -- particularly if there is a conspicuously capable individual already on the political scene," an editorial said Wednesday.

"There is such a candidate, and it should surprise no one that her name is Hillary Clinton." 


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REUTERS: Warren Buffett's Berkshire shutters Virginia newspaper


Wed Nov 14, 2012 3:54pm EST
 
(Reuters) - Warren Buffett's Berkshire Hathaway plans to shutter the 143-year-old News & Messenger in Manassas, Virginia, just six months after it was scooped up from Media General.

The 10,000 circulation newspaper, its website, and its companion weekly publication will close on December 30, the day the final print edition will be published. The move affects the staff of 33 whose jobs will be eliminated.

The announcement was made on Wednesday by World Media Enterprise, which operates the 63 newspapers that Berkshire Hathaway acquired from Media General in June.

"Business conditions drove us to this decision," wrote Doug Hiemstra, president of World Media Enterprises, in a post published on the News & Messenger's website Insidenova.com.

"We do not see a long-term viable way to maintain a daily news operation here."

Buffett, who not too long ago derided newspapers as investments, changed course this year, snapping up scores of small and mid-sized papers throughout the United States.

In addition to the majority of Media General's newspaper properties, he recently purchased a paper in Texas and took a small stake in the newspaper chain Lee Enterprises.

Known as the "Oracle of Omaha," Buffett's acquisition approach to newspapers is to buy small publications that cover the local market. Though he holds a stake in the Washington Post Co, he shuns large metropolitan newspapers.

The closing of such a small paper in the Berkshire stable could be a sign that even publications that are laser-focused on community news are facing serious challenges.

Indeed, Buffett said in a CNBC interview in October that revenue is down about 1 percent at Berkshire's smaller papers.

"Let me be clear: World Media remains bullish on community newspapers and our ability to publish news and advertising content on a variety of platforms that is useful to our readers and the communities in which they live," Hiemstra wrote on the News & Messenger's website.

(Reporting By Jennifer Saba; Editing by Tim Dobbyn)


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CNN MONEY: We wont go over the fiscal cliff




The Oracle of Omaha, Warren Buffett, thinks the U.S. will not go into a recession even if we temporarily go over the fiscal cliff.


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CNN MONEY: Buffett: Hillary for president in 2016

CNN MONEY: Buffett on 'runaway' health care costs

 


Billionaire Warren Buffett says health care spending remains a big problem unaddressed by the Affordable Care Act.


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Wednesday, November 14, 2012

FORBES: A Conversation With Warren Buffett, 18 Sept 2012




A conversation with Warren Buffett 18 Sept 2012.


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BLOOMBERG: Berkshire Replaces Raba as Buffet Sees Housing Rebound

Berkshire Hathaway Inc. (A) replaced the head of a building-products unit with $2.5 billion in annual sales as Chief Executive Officer Warren Buffett prepares the company for a U.S. housing rebound. 

Todd Raba, 55, will “relinquish” his position as chairman and CEO of Johns Manville, the Denver-based company said today in a statement. Mary Rhinehart, 54, who has served as chief financial officer, was named CEO, effective immediately, the unit of Omaha, Nebraska-based Berkshire said.

Raba “worked diligently during a tough economic environment to effectively position the company for future success,” Buffett, 82, said in the statement. Melody Dunbar, a spokeswoman for Johns Manville, declined to comment on the reason for the departure.

Rhinehart will oversee a unit with about 7,000 employees and 45 manufacturing facilities in North America, Europe and China. Johns Manville makes insulation and roofing and has customers in the aerospace, automotive and building industries. The new CEO has been with the company more than 30 years.

“I couldn’t be more enthused to have her taking on this role,” Buffett said.

Raba had led the insulation-maker for the past five years and in 2011 added the chairman title following David Sokol’s departure from Berkshire. Sokol, who served as chairman of Berkshire’s energy, luxury aviation and Johns Manville units, left after disclosing that he purchased stock in Lubrizol Corp. before recommending the company as a takeover target to Buffett.

Raba had worked under Sokol at Berkshire’s MidAmerican Energy Holdings Co. In August, he announced the acquisition of Industrial Insulation Group, which was previously a joint venture between Johns Manville and Calsilite Group.

‘Better Balance’

Buffett said in July that the U.S. home market was beginning to improve. Berkshire’s billionaire leader tracks economic activity, in part, by studying the results of the company’s more than 70 operating businesses including ones that make paint and bricks.

“It was just a question of getting households in balance with” the supply of homes, Buffett told Bloomberg Television’s Betty Liu in a July 13 interview. “That happens in different paces in different parts of the country, but you have seen a much better balance developing here in recent months. And that’s why you’re seeing some pickup in prices.”

The paint unit, Benjamin Moore, hired Bob Merritt to replace Denis Abrams in June. Berkshire’s CORT Business Services Corp., the world’s largest provider of rental furniture, has named Jeff Pederson CEO, replacing Paul Arnold, who stepped down in July after a 40-year career at the company.


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BLOOMBERG: Buffett Power Unit Targets Renewables for Acquisitions



MidAmerican Energy Holdings Co., the power provider owned by Warren Buffett’s Berkshire Hathaway Inc., is targeting renewable energy deals amid high utility valuations, Chief Financial Officer Patrick Goodman said.

“We believe renewables is the better investment right now” because utilities are too expensive, MidAmerican’s Goodman said in an interview today at an Edison Electric Institute conference in Phoenix. “As a cash buyer, we will be looking at utilities if pricing comes in a bit.”

MidAmerican has sought opportunities to reinvest its cash and highlighted that it has more funds available to service debt and build its business because it doesn’t pay a dividend. The power provider also has access to capital from Omaha, Nebraska- based Berkshire, which holds a 90 percent stake and had $47.8 billion (BRK/A) in cash at the end of September.

MidAmerican formed a new unit in January to support its investments in renewable energy, including the $2.4 billion 550- megawatt Topaz Solar Farm and 168-megawatt Alta Wind VII project in California.

The proportion of energy MidAmerican generated from wind, hydroelectric, solar, nuclear and geothermal rose to 31 percent as of Sept. 30 from 19 percent at the end of 2006, according to a regulatory filing last week.

Chief Executive Officer Greg Abel, 50, helped build MidAmerican through utility acquisitions, including the 2006 purchase of PacifiCorp. In 2008, MidAmerican agreed to terminate its purchase of Constellation Energy Group Inc. after Electricite de France SA bought half of the Baltimore-based company’s nuclear plants. Constellation was acquired by Exelon Corp. (EXC) this year.

Price Ratio

Average price-to-earnings ratio for the 59 companies in the Bloomberg Americas Electric Index is 14.93, up from 14.21 last year and 12.82 in 2010, according to data compiled by Bloomberg. Price to book value is 1.39, up from 0.75 in 2011.

MidAmerican has acquired 1.6 gigawatts of wind and photovoltaic projects since December 2011, adding to an existing 3.3 gigawatts of wind and geothermal assets, according to London-based Bloomberg New Energy Finance.

“Large utilities like MidAmerican are a natural source of equity for renewable projects,” said Stefan Linder, a New York- based analyst for Bloomberg New Energy Finance. “They have a low cost of capital and shareholders that seek long-term, steady returns.”

Buffett also may be interested in tax credits from the projects, Linder said.

Canada Deal

Abel last month struck a deal with TransAlta Corp. (TA) to fund half the cost of natural-gas fueled power plants built or bought in Canada, where the companies said almost $200 billion in new investment is needed during the next 20 years. The energy company has also scouted natural gas investments in the U.S., Goodman said today.

Buffett, the world’s fourth-richest person, has said that regulated businesses like the utilities have earnings power even under adverse economic conditions and can provide fair returns on capital as long as they invest in infrastructure. MidAmerican sells electricity to 6.3 million customers and operates in states including Iowa, Oregon and Utah.

Owning utilities is “not a way to get rich,” Buffett, 82, said at a meeting of U.S. state regulators in 2006. “It’s a way to stay rich.”

To contact the reporters on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net; Noah Buhayar in New York at nbuhayar@bloomberg.net


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Tuesday, November 6, 2012

THE WALL STREET JOURNAL: Trinket-Seller Rides Out Turbulence

Talk about a grand prize.

After years of struggling to avoid default on loans from two private-equity buyouts, Oriental Trading Co.'s chief executive last month found himself in Warren Buffett's office discussing a $500 million takeover bid.
The agreement announced Friday by Berkshire Hathaway Inc. BRKB -0.08% to buy the seller of party supplies and tchotchkes—including hundreds of varieties of rubber ducks—is a happy ending for many employees to more than a decade of tumultuous, revolving-door ownership at Oriental Trading.

Starting with a sale in 2000 by the founder's son, the catalog and online merchant passed through the hands of two private-equity owners and tumbled into bankruptcy after defaulting on hundreds of millions in loans associated with the buyouts. A recent rebound set it up for the all-cash sale to Berkshire, a conglomerate renowned for its commitment to its businesses.

Oriental has "a permanent home with Berkshire Hathaway," Mr. Buffett said in a statement.
That "is huge, especially for a company that has been on the private-equity treadmill for 12 years," says Sam Taylor, the 51-year-old chief executive of Oriental Trading.

Employees at the Omaha, Neb., firm cheered when they found out about the pending sale to Berkshire, also based in Omaha. Better than most people, Mr. Taylor says, the employees "know what it means not to have any debt."

Some companies thrive under private-equity ownership, benefiting from an infusion of operational wisdom and the discipline and belt-tightening needed to keep up with the debt often loaded onto companies by those behind the buyouts.

For years, Oriental Trading was a reminder of what can go wrong. "We were so levered up…that we were forced to make short-term cost cuts that hurt in the long term," Mr. Taylor says. The company's relationship also soured with employees, who doubted the owners' motives.

"There started to be a barrier between executive management and the rest of us," says Beth Diekman, an employee since 1995 who runs Oriental Trading's marketing media operations.
Oriental Trading sells rubber ducks, toys and other novelties. The company struggled through revolving-door ownership the past 12 years.
Japanese immigrant Harry Watanabe started Oriental Trading in 1932, finding a niche selling trinkets of the kind given away at carnivals and fundraisers. He passed the business to his son, Terrance, in the late 1970s. By 2000, when it was sold to private-equity firm Brentwood Associates for an undisclosed amount, the company had $300 million in annual revenue. Brentwood declined to comment.

In 2006, Brentwood sold a 75% stake in the company to Carlyle Group LP CG +0.96% for $750 million. The leveraged buyout increased Oriental Trading's leverage, a measurement of a company's financial risk, to seven times earnings before interest, taxes, depreciation and amortization, up from five times previously, according to S&P Capital IQ LCD. A Carlyle spokesman declined to comment.

Such leverage was common in buyouts at the time but is rare now. The sale left Oriental Trading with $720 million in debt.

Mr. Taylor was brought in by Carlyle and Brentwood in 2008 and soon found that employees "had no idea how the company was doing financially. There was zero communication and no empowerment," he says. An employee engagement survey conducted by Gallup Consulting that year ranked the company in the sixth percentile nationally, he adds. He also bristled under what he saw as micromanagement by shareholders.
Sales declined amid the recession and Oriental Trading cut 20% of salaried jobs and halted many catalog mailings to meet targets required by loans, Mr. Taylor says. It also was squeezed by higher mailing rates.
The company defaulted on loan terms in early 2009 but received a temporary waiver. A group of hedge funds bought the loans at a discount to face value, later swapping them for shares of the company in bankruptcy.

In February 2011, at the end of its seven-month bankruptcy, Oriental Trading had shrunk its debt level by 70%.

Mr. Taylor says the new owners, led by Crescent Capital Group, Par-Four Investment Management and KKR KKR 0.00% Asset Management, a unit of KKR & Co., gave him more room to operate. He focused on developing new products, reaching more prospective customers and improving employee relations—even working incognito in Oriental Trading's warehouse in 2011 with the "Undercover Boss" television show to better understand employee concerns.

[image]  

Derek McMains/ADM Video
Sam Taylor, CEO of Oriental Trading Co., was hired in 2008 and found 'zero communication.'
Oriental Trading exceeded targets in its first six months out of bankruptcy and by mid-2012, the shareholders again sought to sell the company.

When auction bidders didn't hit the minimum price, said people familiar with the process, the funds decided with Mr. Taylor to reach out to Mr. Buffett. The investor owns a number of businesses in Berkshire's home city, including the Omaha World-Herald newspaper, which his conglomerate purchased last year.
Oriental Trading's chief financial officer Steve Mendlik sent an email in October to his counterpart at Berkshire suggesting a sale, according to Mr. Taylor. Days later Messrs. Mendlik and Taylor found themselves walking down a long hallway in Berkshire's office to meet Mr. Buffett and his lieutenants, including Todd Combs and Ted Weschler.

Mr. Buffett quizzed the executives on everything from performance to product mix to customer retention. Two hours later, a deal was struck, says Mr. Taylor, who had never met Mr. Buffett before. "It was surreal."
Ms. Diekman, the longtime employee, says, "There's a sense of relief that our future is certain now."

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Monday, November 5, 2012

BLOOMBERG: Berkshire’s Cash Nears Record as Buffett Extends Hunt


Billionaire Warren Buffett
Baltimore, Maryland-based Under Armour Inc. was second in the peer group behind Gildan with a 52 percent rise, and Hanesbrands, based in Winston Salem, North Carolina, was third with a 46 percent gain, Fruit of the Loom, based in Bowling Green, Kentucky, is a unit of Berkshire Hathaway, run by billionaire Warren Buffett. Photographer: Scott Eells/Bloomberg

By Noah Buhayar on November 05, 2012
Berkshire Hathaway Inc. (A)’s cash pile climbed to near-record levels in the third quarter as Chairman Warren Buffett extended his search for larger acquisitions.
Cash surged 17 percent to $47.8 billion (A) in the three months ended Sept. 30, Omaha, Nebraska-based Berkshire said in its quarterly regulatory filing Nov. 2. That’s $115 million less than the record at the end of June 2011.
Buffett, 82, has relied on stock picks and takeovers (A) to build Berkshire over the past four decades into a company valued at more than $200 billion. As the firm increased in size, the billionaire has focused on managing its biggest equity holdings, including stakes (A) in Wells Fargo & Co. and International Business Machines Corp., and finding multibillion-dollar acquisitions.
“He’s elephant hunting,” said Jeff Matthews, author of “Secrets in Plain Sight: Business & Investing Secrets of Warren Buffett” and a Berkshire shareholder. “And there aren’t a lot of elephants around.”
Berkshire’s more recent deals have included a building- insulation maker and food-distributor Meadowbrook Meat Co. as Buffett’s firm completed so-called bolt-on purchases that cost $1.8 billion in the first nine months of the year.
“We do not believe that these acquisitions are material, individually or in the aggregate,” to the company’s financial statements, Berkshire said in the filing.
Last week, Buffett agreed to acquire party-supply retailer Oriental Trading Co. Berkshire will pay about $500 million, according to a person familiar with the deal who declined to be identified because terms were private.

Profit Climbs

Berkshire’s cash rose after third-quarter net income (5CA) climbed 72 percent to $3.92 billion as profit advanced at units including railroad Burlington Northern Santa Fe and power provider MidAmerican Energy Holdings Co. The company also had better results in its derivative book. Buffett and his deputies sold about $3.18 billion in stock in the three months, while buying $1.18 billion.
Berkshire doesn’t pay a dividend and won’t buy back shares at the current price, according to the company’s repurchase guidelines. Buffett has said that bonds are among the “most dangerous” assets because of inflation and currency risk and that he prefers to buy stocks and whole companies.
“He’s just looking for the best possible big one, and in the meantime it doesn’t hurt to do these little things,” Buffett biographer Andrew Kilpatrick said in a phone interview.
The billionaire passed on a deal valued at about $22 billion because he couldn’t agree on price, he said in May. Buffett has said he looks for companies with a durable competitive advantage and builds in a margin of safety in his investments to shield the company from losses if a wager doesn’t turn out as he expects.

Stock Gain

“He’s not going to pay $20 billion for just $20 billion,” Kilpatrick said. “He’s going to pay $20 billion for $22 billion or $25 billion.”
Berkshire has gained 14 percent this year through Nov. 2, beating the 12 percent advance in the Standard & Poor’s 500 Index.
The U.S. presidential election tomorrow and the so-called fiscal cliff of automatic tax increases and spending cuts at the start of next year may create an opportunity for Berkshire if stock prices fall, said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business. Kass has accompanied students to meet Buffett in Omaha.
The S&P 500 may end the year little changed from its close on Nov. 2, according to the average estimate of Wall Street brokerages surveyed by Bloomberg. The most bearish prediction is for a 17 percent drop.

Fiscal Cliff

Goldman Sachs Group Inc.’s chief U.S. equity strategist David Kostin said stocks may end the year lower because lawmakers’ resolution of the fiscal cliff may be “messy.” The pressures from that risk begin this month and continue through January, he said at a conference in San Diego Sept. 10.
“To the extent that it looks like we’ve run into another deadlocked situation, equities could sell off” giving Buffett more favorable conditions for a buyout, said Kass.
Buffett paid $8 billion in the 2008 credit crisis for preferred stakes in Goldman Sachs and General Electric Co., that gave Berkshire a $1.2 billion investment gain last year when they were redeemed. He also spent $5 billion last year for preferred shares and warrants in Bank of America Corp., after the lender’s shares sank as liabilities tied to home loans rose.
Berkshire’s biggest acquisition, the 2010 takeover of BNSF for $26.5 billion, was at a 31 percent premium to the railroad’s closing price before the deal was announced.
“It’s a good asset for Berkshire to own over the next century,” Buffett said in a 2009 interview with Charlie Rose on PBS, less than two weeks after the railroad deal was announced. “You don’t get bargains on things like that.”
Buffett has used hunting references to describe his eagerness for acquisitions, telling shareholders in a letter of February of last year that “Our elephant gun has been reloaded, and my trigger finger is itchy.”
To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net.
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BLOOMBERG: China’s Stocks Drop on Data Before Leadership Change, U.S. Polls

China’s stocks fell for the first time in five days amid conflicting data on the nation's services industry and before a Communist Party leadership congress and U.S. presidential elections this week.

Jiangxi Copper Co. led declines for metal producers after a gauge of raw materials slid by the most in a month on Nov. 2. Kweichow Moutai Co. (600519), China’s largest maker of baijiu liquor, sank 2.2 percent, pacing a drop among consumer stocks on speculation sales will slow. BYD (002594) Co., an automaker, jumped 3.3 percent after after the city of Shanghai submitted a subsidy plan for new energy vehicles to the national government.

The Shanghai Composite Index (SHCOMP) lost 0.1 percent to 2,114.03 at the close. A services purchasing managers’ index released by HSBC Holdings Plc and Markit Economics dropped to 53.5 in October from 54.3 the previous month. That contrasts with a separate PMI from the National Bureau of Statistics and China Federation of Logistics and Purchasing on Nov. 3 that showed a jump to 55.5 last month from September’s 53.7.

“With the U.S. and China changing leadership, investors are more risk averse,” said Xu Shengjun, an analyst at Jianghai Securities Co. in Shanghai. “There’s much uncertainty for the economy before the congress. Data such as the non-manufacturing PMI is one-off and only shows that the economy is more stable, it doesn’t mean it is going to rebound. At best, we will see a short-term gain in stocks now, but any increase is temporary.”

Slim Lead

The Communist Party will start on Nov. 8 its 18th Congress when 2,270 delegates meet over several days to decide on leadership changes that will probably see Xi Jinping replace Hu Jintao as general secretary of the party that’s ruled China since 1949. In the U.S., national and state-level data show President Barack Obama with a slim lead in the quest for the Electoral College votes needed to win this week’s election.
The CSI 300 Index (SHSZ300) sank 0.2 percent to 2,301.88 today, while the Hang Seng China

Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong fell 0.3 percent. The Bloomberg China-US Equity Index slipped 1.1 percent on Nov. 2.

Trading volumes in the Shanghai Composite exceeded the 30- day average for this time of day by 7.2 percent, data compiled by Bloomberg show. Thirty-day volatility in the gauge was at 16.4, lower than this year’s average of 17.2.

The Shanghai Composite has gained 1.3 percent over the past month, narrowing this year’s slump to 3.9 percent, as reports on manufacturing and industrial earnings signal the economy is bottoming. The gauge trades at 9.7 times estimated profit, compared with the 17.8 average multiple since Bloomberg began compiling the weekly data in 2006.

Buying Opportunity

“Investors are not that much concerned about the conflicting data,’” Daphne Roth, Singapore-based head of Asia equity research at ABN Amro Private Banking, which oversees about $207 billion, said in a phone interview. “If you look at all the data, there is improvement and that’s more important. I would take this as an opportunity to accumulate, rather than as a signal to sell.”

Hu Deping, the son of China’s late Communist Party chief Hu Yaobang, called on leaders of the world’s most populous nation to pursue political and economic changes on the eve of the leadership transition. The nation’s central bank said on Nov. 2 the economy is expected to maintain “steady and relatively rapid growth” as earlier government policies to support expansion take effect.

The People’s Bank of China’s quarterly monetary policy report suggests policy easing will continue and may even pick up speed, Zhang Zhiwei, Nomura Holdings Inc.’s chief China economist, wrote in a report e-mailed on Nov. 2.

Commodity Slump

Jiangxi Copper, the nation’s biggest producer of the metal, slid 1.7 percent to 21.23 yuan. Yunnan Copper Industry Co. slumped 1.2 percent to 15.40 yuan.

Copper for delivery in three months lost 0.5 percent to $7,634.75 a metric ton on the London Metal Exchange today. The Thomson Reuters/Jefferies CRB Index of raw materials retreated 1.6 percent on Nov. 2, the biggest drop in a month. Hedge funds cut bullish wagers on commodities by the most since June as prices retreated to a three-month low on mounting concern that Europe’s debt crisis will worsen and U.S. growth slow.

Kweichow Moutai, which jumped a combined 13 percent in September and October, lost 2.2 percent to 242.92 yuan today. Wuliangye Yibin Co.. the second-largest baijiu maker, retreated 2.2 percent to 33.69 yuan. Investors are selling shares of the liquor makers because of speculation fourth-quarter sales may be disappointing and on concern recent rallies were excessive, said Wang Ping, a Great Wall Securities Co. analyst in Shenzhen.

BYD, an electric-car maker that is part-owned by Warren Buffett’s Berkshire Hathaway Inc., advanced 3.3 percent to 15.20 yuan. Shanghai has submitted its subsidy plan for new energy vehicles to the National Development and Reform Commission, the Oriental Morning Post reported today, citing an unidentified official with the local government.

Cheaper Options

The cost of protecting against losses in Chinese stocks relative to U.S. equities fell to a one-year low on prospects the slowdown in the world’s second-largest economy will ease. The AlphaShares Chinese Volatility Index, derived from options on companies listed in Hong Kong, traded at 18.61 on Oct. 31, 1 percentage point above the Chicago Board Options Exchange Volatility Index and the smallest gap since September 2011. The premium has narrowed from as much as 1.43 percent on Sept. 9. 

The iShares FTSE China 25 Index Fund (FXI), the biggest Chinese exchange-traded fund in the U.S., gained 1.4 percent last week. 

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net 


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VENDING TIMES: Warren Buffett Buys Fun Express Parent Oriental Trading Co. For $500 Million

Nick Montano


Warren Buffett, Oriental Trading Co., Fun Express, FEC OMAHA, NE -- Berkshire Hathaway Inc. has agreed to buy Oriental Trading Co., an importer of discounted novelty goods sold by mail-order and the parent company of Fun Express, a supplier of prizes to family entertainment centers and coin machine operators. OTC and Warren Buffett's BHI are both headquartered in Omaha. The transaction is expected to close at the end of November.

Berkshire Hathaway has agreed to pay about $500 million for Oriental Trading, according to financial news reports, and that price tag represents a big payday for Oriental Trading's shareholders, KKR & Co. being the largest, which bought the company out of bankruptcy in early 2011. Other shareholders in the firm include hedge funds Crescent Capital Group and Par IV Capital Management LLC.
In 2010, Oriental Trading and its Fun Express subsidiary, which was created about a decade ago to supply the FEC and coin-op amusement industry, filed for Chapter 11 bankruptcy. At the time, the OTC and Fun Express filing showed assets of $10 million to $50 million and total liabilities of $500 million to $1 billion category. Both companies continued to operate after the filing.

Financier Buffett is already involved in newspapers, jewelry and insurance, among other holdings, and many of them are from Omaha; and now the 82-year-old billionaire can add amusement supplies to his local assets.

With more than 40,000 cut-rate party goods in stock, Oriental Trading is the nation's largest direct retailer. The 80-year-old mail-order merchant was suffering from low consumer spending and higher costs when it filed for bankruptcy two years ago.

Oriental Trading has had a string of private-equity owners. Brentwood Associates owned the company until 2006, when it sold a 75% stake to Carlyle Group LP for approximately $750 million in a deal valuing the retailer at about $1 billion, or 10 times EBITDA.

"Oriental Trading is a leader in its industry, has a strong management team and delivers exceptional customer value and service," Buffett said. He credited OTC president Sam Taylor and his team for improving the company and positioning it for long-term growth.

"We are delighted to have them join the Berkshire Hathaway family and continue their quest to make the world more fun," Buffett added. "They have had several changes to ownership in the past, but OTC has a permanent home with Berkshire Hathaway."

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Read the full transcript of the March 2 Squawk Box Interview with Warren Buffett
Download the 2010 Berkshire Hathaway Annual Report
Download the 1977 - 2010 Warren Buffett Letter's to Berkshire Hathaway Shareholders

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The Essays of Warren Buffett: Lessons for Corporate America, Second EditionThe Essays of Warren Buffett: Lessons for Corporate America, Second Edition by Warren E. Buffett
Buy new: $24.32 / Used from: $17.64
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The Snowball: Warren Buffett and the Business of LifeThe Snowball: Warren Buffett and the Business of Life by Alice Schroeder
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