TraderXx, I have a very small position in Trenwick, TWK. Bad news has piled on bad news. In this particular case, because of TWK's bottom-line losses, issuance of preferred shares, suspension of preferred dividends, credit downgrade, forbearance agreements, etc., I assume Berkshire's investment in TWK is structured all to the benefit of Berkshire and a hail Mary play for TWK shareholders. That is, I am guessing the investment will cover BRK from the possibility (a good one, I am guessing) that TWK will go bankrupt. I don't know how the agreement is structured, but I'd guess it would assure some collateral (e.g. purchase of reinsurance policies) or issuance of some high yield preferreds (to drain TWK, which might not have got a capital infusion except for Berkshire, it being the last resort), or some provision that if the stockholders get wiped out, Berkshire will not be among them.
I have posted here several times that I am a believer in following Mr. Buffett or his surrogate(s) into stocks if you can buy them soon after these guys do at same or lower price. Unless someone can show me where these Berkshire investors actually bought shares of TWK common, my opinion is: avoid the stock. On the other hand, I am holding on to my position a bit longer because I am hoping the stock could or might be propped up a bit if Buffett followers make a mistake and take positions in the stock. So on that hand, I encourage you and everyone else to buy, so I might sell higher and reduce my losses a bit and move on. -g-
jmo
Paul Senior
and I've been wrong many, many times |
