Has Buffet gone senile?

Since BRK has not been required to post collateral on their short puts, the counterparty is hedging their exposure through the CDS. As the puts go more in the money, there is more mtm p/l exposed to BRK credit and so more protection must be purchased. Watch for the CDS to collapse once we rally off the lows.

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1 comment so far

  1. tramadolman on

    Gary,

    I don’t think the CDS widened due to the index puts, but rather the pressure on the investment portfolio.

    Berkshire has 60+ bill in tangible BV as far as I can tell, after MTM. Maybe they can buy the name from Fortress Investment Group after FIG goes down


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