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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Lars who wrote (1805)	10/26/1998 9:21:00 AM
From: Lars	Read Replies (2) \| Respond to of 15132

* Long Gone Capital Update * Buffett may snap up LTCM from its rescuers WARREN BUFFETT, the billionaire investor, is believed to be planning a buyout of Long Term Capital Management from the 14 Wall Street banks that originally bailed out the hedge fund for $3.6 billion (£2.1 billion). Mr Buffett, who is estimated to be the world's second- richest man after Bill Gates, could take over the 90 per cent stake acquired by the banks, according to insiders. The banks would rid themselves of an embarrassing investment and, if not make money on the bailout, at least shift the risk to Mr Buffett. LTCM is currently worth $3.8 billion and, if legal problems can be resolved, Mr Buffett would probably pay less than $4 billion. He may wait until the fund has been stabilised before making an offer. Mr Buffett's takeover would be a rerun of an earlier bid to buy LTCM. In the middle of the bailout negotiations with the 14 banks and the Federal Reserve, Mr Buffett faxed his first buyout offer to John Meriwether, the LTCM founder. The soft-spoken Mr Buffett gave Mr Meriwether exactly 50 minutes to accept his offer. Mr Meriwether, a former Salomon Brothers trader famous for once offering to bet $10 million on the number shown on a dollar note, and his partners would have received $250 million in cash, but would have been forced to leave the premises within days. Mr Buffett also informed the Federal Reserve, which was supervising the negotiations, of his plans. The Federal Reserve officials, who only reluctantly organised the bailout, were in favour of a Buffett takeover. However, Mr Meriwether was not ready to give up control of his fund, not even for $250 million. He reckoned that 14 banks could never agree on how to run one fund and would need him to stay around. He told the Federal Reserve that it was legally not possible to agree to the terms proposed by Mr Buffett because of the way that the fund's parent company was structured. Fed officials felt that they had no other choice but to proceed with the bailout involving the 14 banks. Mr Meriwether stayed at LTCM, as he had predicted. Mr Buffett runs the Berkshire Hathaway investment company, which has so far steered well clear of the highly geared hedge funds. However, the investor known as the Sage of Omaha has a history of riding to the rescue of Wall Street's great and good. In 1991 he boarded Salomon Brothers after the investment bank teetered close to collapse. Earlier this year the investment guru complained that there were very few decent investment opportunities on offer globally. If he managed to turn around LTCM with the help of his own highly rated team, the profits would be substantial, even by his standards.