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Buffett did not buy Conseco bonds, Fortune says
(UPDATE: Adds details, closing prices)
By Jonathan Stempel
NEW YORK, Feb 7 (Reuters) - The shares of Conseco Inc. (NYSE:CNC - news) fell nearly 6 percent on Wednesday after business publication Fortune magazine wrote that billionaire investor Warren Buffett, contrary to earlier reports, did not buy any of the insurer's junk bonds.
The Fortune story contradicts a Dec. 29 Wall Street Journal story that said Buffett had bought ``several hundred million dollars'' of Carmel, Ind.-based Conseco's debt. The Journal story helped trigger a 15 percent surge on Dec. 29 in the company's shares.
``The Fortune report was accurate and the Journal report wasn't,'' Debbie Bosanek, a spokeswoman for Buffett, told Reuters on Wednesday. Buffett spokespersons rarely speak to the press.
A spokeswoman for Fortune, Susan Brown, confirmed on Wednesday afternoon that the story appearing on Fortune's Web site was produced by the magazine. No spokesmen for Conseco and The Wall Street Journal were immediately available for comment.
Fortune's story about Buffett, which appears on the magazine's Web site and is titled ``The Value Machine,'' reported, as did the Journal, that Buffett did buy junk bonds of another finance company, Scottsdale, Ariz.-based Finova Group Inc. (NYSE:FNV - news).
Conseco shares closed Wednesday on the New York Stock Exchange at $14.79, down 90 cents, or 5.74 percent, on volume of more than 7.8 million shares. They had traded down nearly 9 percent earlier in the day.
The shares had hit a 52-week high of $18.60 on Jan. 29; they rose $1.69, or 15 percent, to close at $13.19 last Dec. 29. Several traders said they saw no price quotations on Conseco's bonds.
Much of Wednesday's loss came after 12:28 p.m. (1728 GMT), when Bloomberg News reported the existence of the Fortune story.
In the Fortune story, author Carol Loomis discussed some of the Omaha, Neb.-based Buffett's recent purchases.
``He's been buying some junk bonds, among them Finova's (but not Conseco's, even though some publications recently reported he was),'' she wrote.
The Wall Street Journal reported on Dec. 29 that Buffett, through his investment vehicle Berkshire Hathaway Inc. (NYSE:BRKa - news), ``recently paid several hundred million dollars to buy the junk bonds of Finova Group ... and has also made a similar-size bet on the debt of Conseco.''
Citing people familiar with the matter, it said Buffett was ``buying several hundred million dollars worth of the company's debt in recent months.''
Conseco is trying to turn around after overpaying in 1998 for loan company Green Tree Financial Corp. It ousted founder and Chief Executive Stephen Hilbert last April, and in June hired former General Electric Co. (NYSE:GE - news) executive Gary Wendt as chief executive to steer the turnaround.
The Wall Street Journal is published by Dow Jones & Co. (NYSE:DJ - news). Fortune is part of Time Inc., a unit of AOL Time Warner Inc. (NYSE:AOL - news).
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