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Strategies & Market Trends : Value Investing
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To: Wallace Rivers who wrote (16560)3/8/2003 5:35:44 PM
From: Joan Osland Graffius   of 78653
 
Wallace,

Warren Buffet and junk.

We know a little on the communications deal he did. He bought the debt for 30% interest and solely secured assets. He also had the opportunity to short the company stock. I do not think Warren is taking very much risk in the junk bond arena. If one followed George Soros during the last 30 odd years he plays the same game where he gets high interest rates on loans to companies if he can solely secure the assets.

I would suspect Warren is interested in loaning money to some of these energy companies if he can secure some of the assets for pennies on the dollar. These cheap assets would be nice additions to his energy company.

People chasing junk bonds today reminds me of people chasing the high priced stocks during the late 1990's. They are thinking of getting larger interest income than what makes sense relative to the debt market in general.
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