Billionaires do some bargain hunting
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KAI RYSSDAL: Warren Buffett is 77 years old. Kirk Kerkorian is 90. Each of them has a net worth well into the 10-figure range. So when they start throwing their money around people pay attention. Mars, the candy company that makes M&Ms, among many other confections, is teaming up with Buffet to buy Wrigley for $23 billion. The Mars-Wrigley combo is going to be the biggest candy company in the world. Kirk Kerkorian started buying Ford shares back at the beginning of this month. He owns almost 5 percent of that car maker already. He announced today he wants more. Almost makes you forget all about subprimes and the credit crunch, doesn’t it? Our New York bureau chief Jill Barshay reports.
JILL BARSHAY: Warren Buffet and Kirk Kerkorian aren’t the only billionaires shopping for bargains in this market. Wilbur Ross has been buying mortgage companies too.
Quincy Krosby is chief investment strategist of The Hartford. She says the example set by these heavyweights may lure more buyers back into the market.
Quincy Krosby: Very, very experienced investors with terrific track records see value. That’s a very good sign. What has been missing in this market has been confidence.
Krosby says the re-entry of long-term investors is a sign that the market is bottoming out. But it has a way to go. Mitchell Corwin is a candy industry analyst at Morningstar. He points out that Mars had to go cap-in-hand to Buffet.
Mitchell Corwin: I think it speaks to that there’s still some turbulence in the credit markets that Mars had to creatively finance this acquisition of Wrigley.
Robert Teitelman is the editor of The Deal. He says the smart money thinks now is an ideal time to buy beaten down assets.
Robert Teitelman: Buffet is always most effective in markets where everybody else is desperate or fearful. He has the cash, he’s got a giant war chest there. Kirk Kerkorian and his vehicle, Tracinda, are in the same position.
But Buffet and Kerkorian aren’t like other investors. All the cash they’ve got stockpiled in those war chests acts as a cushion, which they may need if the markets keep giving all us a bumpy ride.
In New York, I’m Jill Barshay for Marketplace.
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